Tehran has failed to dispel¹ international doubts it wants nuclear bombs, the U.N. nuclear watchdog agency reported on Thursday, clearing the way for the Security Council to consider sanctions on Tehran.

But council diplomats² said they would proceed cautiously, delaying deliberations until after a meeting between European Union foreign policy chief Javier Solana and top Iranian nuclear negotiator Ali Larijani.

John Bolton, the U.S. ambassador to the United Nations, said he would meet with his French, British and German counterparts to begin talks on a sanctions resolution.

"We are certainly ready to proceed here in New York once we are given the instruction to do so," Bolton said.

Western countries, including the United States and the European Union fear Tehran is using a civilian³ nuclear energy program as a cover for making atomic bombs. Iran says it wants only to generate electricity.

The Security Council and the Vienna-based International Atomic Energy Agency, or IAEA, had demanded that Iran suspend its enrichment of nuclear material by the end of August so that talks could begin on a way to resolve the crisis.

But an IAEA report said Iran just last week resumed making low-enriched uranium, suitable for power plant fuel, with a cascade⁴ of 164 centrifuges at its pilot enrichment plant.

It also said a lack of Iranian cooperation had crippled IAEA probes into the program.

"Iran has not suspended its enrichment related activities," the IAEA said. "Iran has not addressed the long outstanding verification issues or provided the necessary transparency to remove uncertainties⁵ associated with some of its activities."

Western diplomats say they want the U.N. sanctions to be imposed on Iran in an incremental⁶ fashion, increasing the pressure over time if Iran presses on with its nuclear programs.