"The Iranians agreed to suspend -- but not terminate -- their nuclear weapons program. Our position is that they ought to terminate their nuclear weapons program," Bush said.

The UN nuclear watchdog agency Monday spared Iran from being referred to the UN Security Council for possible sanctions after Tehran agreed, in a deal with Britain, France and Germany, to suspend its uranium enrichment program.

Iran quickly boasted of having humiliated the United States by agreeing to only a temporary freeze and beaten the UN sanctions threat. In Washington, the US State Department rejected such claims as "jaundiced, prejudiced and counterfactual."

Bush would not say whether he still hoped to take the Islamic republic before the Security Council or say directly whether he was unhappy about Iran's agreement with the International Atomic Energy Agency (IAEA).

"I viewed yesterday's decision by the Iranians as a positive step. But it's certainly not the final step," said Bush, who has accused Tehran of using its nuclear program as cover for a secret effort to acquire atomic weapons.

Iran claims its nuclear program is a peaceful, civilian effort and rejects Washington's claims.

"It's very important for whatever they do to make sure that the world is able to verify the decision they have made. And so we've obviously got more work to do," said Bush.

The president's comments came during a joint public appearance with Canadian Prime Minister Paul Martin as the US president made his first official working visit to Canada since taking office in January 2001.

The president also pledged to keep working with Britain, France, and Germany, who brokered the deal with the Iranians.

"What we're interested in is them terminating a nuclear weapons program in a verifiable fashion. And we'll continue to work with our friends," he said.

Canada, the 2004-2005 chair of the IAEA Board of Governors, has largely mirrored the US position, and has warned it will press the agency to inform the Security Council of any violation of the deal with Iran.

"Whether it's Iran, whether it's North Korea, I think that the world came to a very important decision many, many years ago in terms of nuclear proliferation," Martin told reporters at the press conference.

Iran and the European trio are to begin talks in December on a package of rewards to Iran for suspending uranium enrichment, the key process using centrifuges to make fuel for nuclear reactors -- or the explosive core of atomic bombs.

Earlier, Iran's top national security official and nuclear negotiator Hassan Rowhani stressed that Tehran "has not renounced the nuclear fuel cycle, will never renounce it and will use it."

"We have proved that, in an international institution, we are capable of isolating the United States," he told reporters at a news conference. "And that is a great victory."

Rowhani, who smiled and joked with reporters during a nearly two-hour-long press conference, claimed that the US envoy to the IAEA "was enraged and in tears, and everybody said that the Americans had failed and we had won."

But State Department spokesman Richard Boucher dismissed his assertion.

"No, I don't," he told reporters when asked if he agreed with Rowhani's comments. "I expect him to take a jaundiced, prejudiced and counterfactual view of the situation."

"The only thing that matters is performance," Boucher said. "Our view is that Iran is very specifically on the hook to carry through with its pledges and its promises now."

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