A meeting Monday between ElBaradei and a senior Iranian negotiator was cancelled since "the Iranians didn't want to talk substance at this point" on questions about possibly weapons-related work in a long-running investigation by the watchdog International Atomic Energy Agency (IAEA), a diplomat said.

Iranian negotiators "no longer have the authority to discuss any issue," a second diplomat said.

The diplomat said the Iranians were backing off from a pledge their top negotiator Ali Larijani made May 31 to EU foreign policy chief Javier Solana to talk to the IAEA on "information access and cooperation."

The diplomat said hardline President Mahmoud Ahmadinejad was apparently cutting off the more moderate stance favoured by Larijani. Ahmadinejad has warned it is "too late" to stop Iran's nuclear programme,

The United States claims that a nuclear programme Iran says is a peaceful effort to generate electricity is in fact a cover for developing nuclear weapons.

Washington says it wants a diplomatic solution but has not ruled out a military intervention and has placed sizeable naval forces in the Gulf.

ElBaradei told an IAEA meeting here: "I am increasingly disturbed by the current stalemate and the brewing confrontation -- a stalemate that urgently needs to be broken, and a confrontation that must be defused."

The IAEA's 35-nation board of governors began Monday in Vienna a week-long meeting that could bring Tehran one step closer to a third round of UN sanctions against its nuclear programme.

ElBaradei said "dialogue and diplomacy are ultimately the only way to achieve the negotiated solution foreseen in the relevant Security Council resolutions," according to a copy of his speech made available to the press.

The UN Security Council has imposed two rounds of sanctions to get Iran to suspend uranium enrichment, which makes nuclear reactor fuel but also atom bomb material, and to provide information about suspect nuclear activities.

But, said ElBaradei: "The facts on the ground indicate that Iran continues steadily to perfect its knowledge relevant to enrichment, and to expand the capacity of its enrichment facility" in Natanz.

Iran is also continuing "with the construction of its heavy water reactor at Arak," which can produce plutonium, like enriched uranium a potential bomb material, and blocking "our right to re-verify design information at Arak," ElBaradei said.

This leaves the IAEA unable "to make any progress in its efforts to resolve outstanding issues relevant to the nature and scope of Iran's nuclear programme," ElBaradei said.

The United States expects intense diplomacy in coming weeks for plans to step up UN Security Council sanctions against Iran, the State Department said Monday.

US Undersecretary of State Nick Burns would raise the Iranian nuclear issue with his counterparts from Germany, Britain, France and Italy at a meeting in Paris this week, a spokesman said.

Iran, which is still allowing safeguards inspections at Natanz, strove Monday to soften the diplomacy against it.

Senior Iranian nuclear negotiator Javad Vaidi met at the Austrian foreign ministry in Vienna with Robert Cooper, a top aide to Solana.

But a diplomat said the IAEA had cancelled meetings for Vaidi with ElBaradei and his chief safeguards inspector Olli Heinonen.

Cooper and Vaidi told reporters their main focus was to prepare another meeting of Larijani and Solana.

Vaidi described his almost five-hour meeting with Cooper as "kind of constructive ... but you cannot expect a huge miracle."

ElBaradei is to report this week that Iran is expanding uranium enrichment and failing to come forth with information required to settle outstanding questions about such issues as documents Iran has for making uranium metal hemispheres used in atom bombs, according to a copy of the report.

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