The 35-member board decided by consensus that the agency's share of the prize should "be used for funding the needs of developing countries in the peaceful application of nuclear energy and, in this connection, both human health and food production were specifically mentioned," a statement from the UN nuclear watchdog said.

The meeting coincided with the return of the head of the agency's non-proliferation safeguards department, Olli Heinonen, to Vienna from a three-day visit to Iran, but the IAEA said the Peace Prize was the only item on its agenda.

The 1.07 million euro (1.28 million dollar) Nobel award is being shared by the IAEA and its secretary general Mohamed ElBaradei.

"The prize is a recognition of the challenge of nuclear terrorism, of the challenge of nuclear proliferation and the need for the reduction of nuclear weapons," ElBaradei said after the meeting.

IAEA spokeswoman Melissa Fleming said that ElBaradei himself "intends to direct his prize money to a charity or other good causes."

Earlier US ambassador Gregory Schulte said, "We think this prize should reinforce the agency's resolve to face future challenges, whether it is promoting human health or confronting blatant non-compliance."

"If Iran is continuing down the road it is going ... then the board will need to carry out its statutory responsibility to report Iran to the Security Council," Schulte added.

The agency's governing council is due to meet again on November 24 to decide whether to refer Iran to the UN Security Council over its nuclear activities, which the United States in particular suspects are aimed at developing an atomic bomb.

An IAEA resolution in September condemned Iran for a lack of transparency over its nuclear programme and for resuming its conversion of uranium, the first step towards enrichment of the mineral that could be used for weapons.

Schulte warned that this behaviour posed "serious questions about the peaceful nature of its nuclear activities".

Meanwhile in Paris US Secretary of State Condoleezza Rice and French President Jacques Chirac agreed in talks that "the perspective of an Iran in possession of nuclear weapons is unacceptable," according to a spokesman for Chirac.

"We have to have a very strong message that of course there is always the course of negotiation ... but there is also the course of the Security Council," Rice said after the talks.

But Chirac said that "it is necessary to continue the way of dialogue started by Germany, Britain and France in close consultation with Russia, in complete openness with the US, and with full respect by Iran of the Paris Accord" of November 2004, Chirac's spokesman said.

Under the Paris Accord Tehran agreed to suspend its enrichment of uranium.

According to a diplomat close to the IAEA, "there is nothing new" and Iran is sticking to its position. Iran says it is ready to restart talks with the three EU nations but is not prepared to hear renewed demands that it abandon sensitive nuclear fuel cycle technology.

Heinonen, second-in-command at the IAEA, returned Friday from Iran where he met Iranian nuclear officials and UN inspectors on the ground, according to a Western diplomat who did not give details of the results of his visit.

ElBaradei was invited at the end of September to Tehran but told AFP in Vienna he had no immediate plans to go there.

ElBaradei may use his half of the prize to create a mutual aid fund, according to a diplomat close to the IAEA. This would follow the example of UN Secretary General Kofi Annan, who created a special fund for the children of United Nations civilian personnel killed around the world after he and the UN won the prize in 2001.

All rights reserved. � 2005 Agence France-Presse. Sections of the information displayed on this page (dispatches, photographs, logos) are protected by intellectual property rights owned by Agence France-Presse. As a consequence, you may not copy, reproduce, modify, transmit, publish, display or in any way commercially exploit any of the content of this section without the prior written consent of Agence France-Presse.