"United States defeated over sending Iranian dossier to Security Council," trumpeted the headline in the conservative daily Jomhuri Islami, after diplomats said the International Atomic Energy Agency would not call for a UN referral.

Iran is suspected of using an atomic energy drive as a cover for weapons development, charges Tehran has consistently denied.

In September, the IAEA's 35-nation board of governors chastised Iran for being in non-compliance with the nuclear Non-Proliferation Treaty (NPT), paving the way for its to be referred to the Security Council, which could impose sanctions.

But officials were upbeat about the meeting under way in Vienna.

"I consider the circumstances of the next IAEA meeting to be more constructive and positive than the previous one," Foreign Minister Manouchehr Mottaki told reporters on Wednesday.

The United States, Europe and China reportedly now back a Russian plan to allow Tehran to conduct uranium enrichment on Russian soil in order to keep the Islamic republic from obtaining nuclear technology crucial in making atom bombs.

Enriched uranium can be fuel for nuclear power reactors but also the raw material for the bomb.

Mottaki said Iran had yet to receive such a proposal, and claimed it it would be a non-starter.

"Enrichment and the fuel cycle are things that the Islamic Republic of Iran consider to be natural and legitimate rights and within the framework of the NPT," he said.

"It is natural that Iran wants to keep these activities within its own borders."

Talks between Iran and Britain, France and Germany broke off in August when Iran resumed uranium conversion -- a precursor to enrichment -- it had suspended nine months earlier.

Preliminary talks on resuming long-term negotiations could take place on December 6, EU diplomats have said.

The Resalat newspaper said the possible December 6 meeting showed that "Iran doesn't accept the language of force."

Iran argues fuel cycle work for peaceful purposes is allowed by the NPT. But critics say the country is exploiting a loophole in the cornerstone of the global anti-proliferation regime.

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