But anticipation of renewed relations after prolonged tensions was clouded by an immediate warning from Tehran that it will only continue the freeze so long as negotiations are ongoing with the Europeans.

European Union (EU) foreign policy chief Javier Solana welcomed the adoption by the UN's nuclear watchdog, of a toned-down resolution seen as a compromise between Europe's constructive engagement with Tehran and hardline US demands.

"Now the work on solid long-term arrangements can proceed rapidly. This work should aim at providing lasting confidence in the peaceful nature of Iran's nuclear programme.

"Working together in a constructive spirit, I believe we now have the chance for a new chapter in our relationship with Iran."

The EU trade talks with Iran, a carrot dangled in front of Tehran to encourage it to meet international demands over its nuclear plans, were effectively suspended last year amid concerns over Tehran's intentions.

A European Commission spokeswoman said that the talks could resume "very early in the new year."

She told AFP: "We are already in contact with our Iranian partners to try to identify a mutually agreable date to start those negotiations where they left off in the summer of 2003."

Solana added: "The EU is determined to reach a positive outcome in these negotiations."

On Monday the International Atomic Energy Agency (IAEA) spared Iran the fate of being referred to the UN Security Council after Tehran agreed in a deal with Britain, France and Germany to suspend its uranium enrichment programme.

The United States, which accuses Iran of seeking nuclear weapons, had been pressuring the Vienna-based IAEA's 35-nation board of governors to send the case straight to New York.

The White House said Monday that the world must "remain vigilant" about Iran's nuclear pursuits despite the IAEA deal.

Solana agreed: "We look to Iran to maintain this full suspension without exception, under the verification of the IAEA," he said.

And to underline the sense of caution Iran boasted Tuesday it had humiliated the United States at a board meeting of the UN atomic watchdog by agreeing to what it reiterated was only a temporary freeze of its suspect nuclear program.

Iran's top national security official and nuclear negotiator Hassan Rowhani also asserted that Iran had only agreed to the suspension for the duration of negotiations with the Europeans.

"The suspension will only last as long as the negotiations. It should be a question of months and not years. We should not feel during the negotiations that they are trying to gain time," he said.

EU officials pointed out that this had been Tehran's stance all along, but underlined that the IAEA agreement was at least a step in the right direction. was neveragreement

"This is one step in the negotations, it's a beginning, not the end," said one source, requesting anonymity.

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