VIENNA The U.N. nuclear watchdog said on Friday it confronted Iran for the first time with Western intelligence reports showing work linked to making atomic bombs and that Tehran had failed to provide satisfactory answers.
The United States passed the intelligence, which came mainly from a laptop spirited out of Iran, to the International Atomic Energy Agency (IAEA) in 2005 but out of fear for its spies only authorized the IAEA to present it last month, diplomats said.
The IAEA said Iran had dismissed the intelligence as "baseless" or "fabricated", but had provided increased cooperation on other issues in the past few months.
Iran's increased transparency amounted to a doubled-edged sword as it reaffirmed Tehran was forging ahead with uranium enrichment in defiance of U.N. Security Council demands to stop all proliferation-sensitive nuclear activity.
The IAEA findings, which also said Iran had failed to clear up all outstanding questions by an agreed February deadline, may spur the Security Council to adopt a third round of sanctions against the Islamic Republic as early as next week.
The United States, which has accused Iran of having a secret program to build nuclear weapons, said the IAEA's report had produced a good reason to impose new sanctions.
Senior diplomats from Britain, France, Germany, the United States, China and Russia would meet in Washington on Monday to discuss the next steps over Iran, Western officials said.
Iran, which says its nuclear program is only for power generation to meet the growing demands of its economy, hailed the IAEA's comments as a victory because it said the watchdog had found Tehran was pursuing peaceful activities.
In unusually strong wording, the IAEA said in a report Iran had not so far explained documentation pointing to undeclared efforts to "weaponise" nuclear materials by linking uranium processing with explosives and designing of a missile warhead.
Publishing details of the intelligence, the IAEA described tests on a 400-metre (1,300 ft) firing shaft seen as "relevant" to atomic arms research and a schematic layout of a missile cone "quite likely to be able to accommodate a nuclear device".
"The (intelligence) studies are a matter of serious concern and critical to an assessment of a possible military dimension to Iran's nuclear program," said the report issued by IAEA head Mohamed ElBaradei.
"The agency will not be in a position to make progress towards providing credible assurances about the absence of undeclared nuclear material and activities in Iran before reaching some clarity on the nature of the alleged studies."
One crucial requirement was for Iran to implement the IAEA's Additional Protocol, which allows snap inspections that could verify that Tehran is not engaged in secret bomb work beyond declared civilian atomic energy sites.
Without that there could be "no confidence in the exclusively peaceful nature of the program", said the IAEA.
"I think that this (IAEA) report demonstrates that whatever the Iranians may be doing to try to clean up some elements of the past, it is inadequate," U.S. Secretary of State Condoleezza Rice told reporters in Washington.
"So I think this is just good reason to move forward with the Security Council resolution (for more sanctions)," she said.
But Iran, the world's fourth largest crude oil producer, said the IAEA report had reaffirmed its program was for peaceful purposes.
"I congratulate the Iranian nation for this success and victory which was a result of their resistance on (the country's) nuclear rights," chief nuclear negotiator Saeed Jalili said. "From our viewpoint this issue has ended."
Iran says it aims to refine uranium only to the low level needed for power plant fuel so it can export more oil wealth.
The IAEA said Iran had given its officials a long-sought look at work to launch a more durable centrifuge meant to overcome technical glitches hindering uranium enrichment.
It said Iran was testing "IR-2" centrifuges, an upgrade of a design obtained from Pakistani-led nuclear smugglers, in the pilot wing of its Natanz nuclear complex. IR-2s can enrich two or three times faster than P-1s.
(additional reporting by Francois Murphy in Paris, Louis Charbonneau at United Nations, Parisa Hafezi and Zahra Hosseinian in Tehran, Matt Spetalnick in Washington)
(Editing by Ralph Gowling)