UPDATE 1-Review on Iceland still being finalized - IMF

* IMF delays board meeting on Iceland

* But will consider first review of "soon"

* Spokeswoman says good progress made

(Adds background, details)

WASHINGTON, July 30 (Reuters) - The International Monetary Fund (IMF) put back on Thursday a review of its funding program for hard-hit Iceland but promised one would take place "soon".

The Fund had tentatively scheduled a board meeting on Iceland for Aug. 3, but said on Thursday it would take place at a later date.

"It will not be taking place next week ... but there has been good progress and we expect the report will be issued soon and there will be a discussion," IMF spokeswoman Caroline Atkinson told a regular news briefing.

Approval of the review would free up much-needed resources under a $2.1 billion IMF loan deal which Iceland secured following an economic meltdown due to the collapse of its banks and currency last year.

Icelandic media have suggested IMF funds could be held up due to a heated debate in the north Atlantic island nation over a bill which ensures Britain and the Netherlands are repaid for billions lost in Icelandic accounts.

Iceland's parliament agreed last week to take a break without passing the bill, which has stirred up a storm of discontent on the island.

Reykjavik agreed in June to reimburse the two countries for compensating people holding Icesave accounts at Landsbanki, one of three top Icelandic banks that failed last year under the weight of massive debts.

Some 300,000 people in Britain, and others in the Netherlands, had deposits in the high-interest accounts.

Icelandic taxpayers feel it is unfair they are being forced to foot the bill for mistakes made by Iceland's collapsed banks following several years of aggressive expansion overseas.

A vote on the bill is not expected at least until the assembly reconvenes next week.

(Additional reporting by Omar Valdimarsson in Reykjavik) (Reporting by Lesley Wroughton; Editing by Chizu Nomiyama and Richard Balmforth)