Tom Casey, a department spokesman, said the matter came up at a meeting of the five permanent members of the UN Security Council -- the United States, Russia, China, France and Britain -- plus Germany.

He said US Undersecretary of State Nicholas Burns raised the issue of "the need for some form of sanctions" in response to Iran's refusal to curb its uranium enrichment activities.

"Certainly this is an issue where there will be continued discussion," Casey said. Asked if this meant no agreement was reached, he replied, "This meeting was not intended to reach decisions on a specific course of action."

Casey said Burns and the political directors of the other five countries had more than three hours of discussions over dinner and all agreed that "Iran has crossed the line laid out by the international community."

"Everyone agreed on the need to find the diplomatic means to get Iran back into compliance with its international obligations and they also agreed on the need for further discussions of how to do that in the UN Security Council," Casey said.

Burns meanwhile told the US television network CBS that Washington had achieved success previously in "isolating Iran" and expressed optimism that major powers would prevail in the end.

"You know, the Iranians are not 10 feet tall, and they have dug quite a hole for themselves, and they're isolated. And so our tactic is to keep pressure on them and see if we can get them to back down," Burns said.

Asked about the economic effect of the dispute, Burns charged that Iran was financing militant groups with the help of rising oil prices.

"It's earning a lot of money on the world oil market with the high prices, and unfortunately for us and the rest of the world, it's using that money for very negative purposes," Burns said.

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