ElBaradei warned that Iran's resuming converting uranium ore into a gas that is a first step in enriching uranium into what can be fuel for reactors or the explosive core of atom bombs could undermine its talks with the European Union and his International Atomic Energy Agency's verification work in Iran as well.

"I call on Iran to continue the negotiation process" with the European Union, ElBaradei said in a press statement after Iran asked the IAEA in a letter Monday to remove seals on crucial machinery so that it could re-start uranium ore conversion.

ElBaradei urged Iran "not to take any action that might prejudice the process at this critical stage when the (EU is) ... expected to deliver a package addressing security and political, economic and nuclear issues" in talks that began in December after Iran suspended all enrichment activities.

The IAEA meanwhile said in its answer to the letter that it needed until next week to install additional surveillance equipment before the seals could be removed and that it would then have to "verify the nuclear material in question," according to a statement released to the press.

A diplomat close to the IAEA said the agency was "looking for formulas to delay so that cooler heads might prevail," with the EU set next Sunday to propose trade, security and technology benefits to Iran in return for guarantees that Tehran is not trying to make nuclear weapons.

Diplomats said ElBaradei was trying to save the diplomatic process as EU negotiators Britain, France and Germany have warned Iran that any resumption of either conversion or enrichment will prompt them to back US-led calls for Tehran's nuclear program to be referred to the Security Council for possibly punishing international economic sanctions.

The United States warned Monday that it would take Iran to the Security Council if Tehran resumes sensitive nuclear work that can be a key step toward building an atomic bomb.

"If they're not going to abide by their agreement and obligations, then we would have to look to the Security Council," White House spokesman Scott McClellan said of the possible resumption of uranium enrichment activities by Iran.

The EU and the United States would first have to call an emergency meeting of the IAEA's 35-nation board of governors in Vienna, which would then send the Iranian dossier to the United Nations in New York.

But an EU diplomat told AFP that the European trio were waiting to see how ElBaradei would respond to the Iranian demand in order to then get "a clarification of Iran's intentions."

The IAEA said in its note to Iran on Monday that it had to install "additional surveillance equipment" at Iran's conversion facility in Isfahan but could not do so before next week.

The IAEA said it was "essential that Iran refrain from removing the agency's seals and from moving any nuclear material at UCF (uranium conversion facility) until such time as the surveillance equipment is installed and the agency has verified the material."

ElBaradei said: "I also call on Iran not to take any unilateral action that could undermine the agency inspection process at a time when the agency is making steady progress in resolving outstanding issues" with Tehran.

The IAEA has been investigating Iran since February 2003 on US charges that the Islamic Republic is secretly developing nuclear weapons.

Iranian negotiator Agha Mohammadi had said in Tehran earlier Monday that an IAEA inspection team currently in Iran would witness the removal of the seals placed on the plant by the UN nuclear watchdog once it had notified the IAEA of its intentions in a letter.

"In this letter, we say to the IAEA that we are resuming our activities at Isfahan starting from today under its supervision," he added.

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