But the talks were put off until Monday because the Islamic republic had still not agreed to withdraw a request for some key equipment to be exempted from the suspension, a spokesman for the UN's atomic energy agency said.

US President George W. Bush meanwhile called for a "verifiable" agreement on Iran halting any suspect nuclear activities.

The "only good deal is one that is verifiable," Bush told reporters.

Diplomats had been hoping to wrap up the deal on Saturday at an International Atomic Energy Agency (IAEA) meeting in Vienna that began Thursday and was originally scheduled to end Friday.

Iran had agreed November 7 in Paris with EU negotiators Britain, France and Germany to an uranium enrichment freeze in order to allay US-led concern that Tehran is secretly developing nuclear weapons. Tehran says its atomic program is a peaceful one intended to produce electricity.

The IAEA, which has documented almost two decades of hidden nuclear activities by Iran, has the power to report Tehran to the UN Security Council, which could impose sweeping economic sanctions on the Islamic Republic, something Washington wants.

Britain, France and Germany seek, however, a resolution by the IAEA's 35-nation board of governors, based on the enrichment freeze and calling for the completion of an investigation into whether there are "undeclared nuclear material and activities in Iran," according to the most recent draft text.

But Iran raised doubts about its commitment to the freeze when it told the IAEA last week that it wants 20 centrifuges be exempted from the suspension.

Centrifuges enrich uranium which can then be used to generate electricity, or at higher enrichment levels the explosive core of a nuclear bomb.

The European trio refused to accept this and were expecting a letter from Iran to the IAEA Friday withdrawing the request for an exemption.

Key to this was a conversation Iran's nuclear chief Hassan Rowhani had by phone with British Foreign Secretary Jack Straw on Friday.

"The conversation did not result in a letter being sent so things are being held off until Monday," a European diplomat told AFP. He refused to comment further.

Iranian nuclear negotiator Hossein Moussavian told AFP that Tehran needed time to respond since Friday is a weekend, rather than a workday, in Iran.

A diplomat close to the negotiations said however that "some kind of misunderstanding cropped up" when Straw spoke to Rowhani.

The diplomat said a face-saving option the Europeans had offered to Iran, for the 20 centrifuges to be put under camera surveillance instead of being sealed as have been hundreds of others, may have led to a misunderstanding, with Tehran thinking this meant it could continue testing the centrifuges.

"The European trio painted itself into a corner. How could they possibly accept a continuing R and D (research and development) centrifuge program," the diplomat said.

Western observers "were not exactly shocked" at the most recent development as the Iranians have a history of trying to change the terms of agreements, a Western diplomat said.

An expert close to the IAEA said the Europeans had not understood how committed the Iranians were to continuing centrifuge research.

The expert said he was wondering "whether the Iranians really want this deal."

Iran earlier Friday appeared to have yielded to demands from Britain, France and Germany to drop its centrifuge exemption request, with the European trio granting the Islamic Republic a series of face-saving gestures.

Besides agreeing that cameras would monitor the centrifuges, the trio considerably softened their resolution on Iran's nuclear program, lessening the possibility of Iran being automatically taken to the UN Security Council if it breaks the suspension deal.

"Iran obviously wanted concessions," the Western diplomat said, noting that the deal must still be sold to hardliners in Iran who see Tehran's nuclear program as an expression of national sovereignty.

A Western diplomat said the United States was ready to accept the resolution if Iran gave up all its centrifuges.

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