"Russia still believes that as long as possible it's better to keep the matter in the International Atomic Energy Agency's hands," Ivanov told the Munich Conference on Security Policy.

"One of the reasons is very simple, they're professionals, they know the difference between conversion and enrichment (of uranium)".

Ivanov said there was a danger that the UN atomic watchdog's decision Saturday to report Iran to the UN Security Council would lead the Islamic republic to throw IAEA inspectors out of the country.

"If they are expelled, that will be a very bad sign," Ivanov said.

"As long as they are inside Iran, at least we can get some picture of what is happening there in this nuclear programme."

In Tehran, a defiant Iran announced on Sunday it was halting snap UN inspections of its nuclear facilities in retaliation at the decision to send it to the Security Council which has the power to impose sanctions.

Ivanov, who is also Russia's Deputy Prime Minister, said he had doubts about imposing sanctions against Iran, which has strong trading links with Russia.

"I am not sure that sanctions are effective," he said. "I am not sure every country will abide strictly by the sanctions."

Russia has proposed a compromise which would see it process uranium for Iran on Russian soil, but Ivanov said that even if Tehran accepted the compromise it was essential that IAEA inspectors remained in Iran.

"I hope that Iran would accept the Russian proposal, but still the Agency should be there in Iran."

Iran's foreign ministry said on Sunday that negotiations with Russia on the possible compromise over its nuclear programme would still go ahead this month.

The Russian proposal would see enrichment -- to produce reactor fuel which can also form the core of a nuclear weapon -- carried out in Russia and then shipped back to Iran.

It is designed to allay fears that Iran will develop a nuclear bomb while at the same time ensuring the Islamic republic the nuclear fuel it says it needs.

The plan has received cautious support from the Western powers, but Iran appears reluctant to give up what it sees as a right to enrich uranium itself.

Iranian and Russian officials are scheduled to meet in Moscow on February 16.

Speaking at the same conference as Ivanov, German Foreign Minister Frank-Walter Steinmeier urged Iran to accept the Russian proposal as a way out of the crisis.

"It can be the key to a negotiated solution... Unfortunately the Iranian government has ignored this opportunity so far," Steinmeier said.

He said the IAEA decision to refer Iran to the UN Security Council was "a show of international unity".

"It was a very strong and determined signal to the Iranian leadership that is should fully suspend its nuclear programme."

"Solving the Iranian nuclear issue is the key task for the immediate future unless we want an arms race in the Middle East," Steinmeier added.

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