Secretary of State Condoleezza Rice said there was a "very strong case" for moving forward with a third round of sanctions against Tehran, while Iran said the report's findings confirmed that its nuclear program is a peaceful one.
"There is very good reason after this report to proceed to the third Security Council resolution," Rice said, adding that the report "demonstrates that whatever the Iranians may be doing to try to clean up some elements of the past, it is inadequate."
The 11-page report obtained by The Associated Press said Iran "has not suspended its enrichment-related activities," despite two sets of U.N. Security Council sanctions over fears the program might be used to make weapons-grade uranium instead of the nuclear fuel Iran says it is interested in.
Instead, said the report, Iran "started the development of new-generation centrifuges"
- an expansion of enrichment - and continued working on heavy water nuclear facilities. When finished, Iran could cull them for plutonium, a possible fissile payload in nuclear warheads.
At the same time, the International Atomic Energy Agency report said that Tehran has cooperated in other areas of an IAEA probe, leading the agency to put to rest for now suspicions that several past experiments and activities were linked to a weapons program.
Specifically, the report suggested the agency was satisfied with answers provided by Iran on the origin of traces of enriched uranium in a military facility; on experiments with polonium, which can also be used in a weapons program; and on purchases on the nuclear black market.
It said that in those areas information given by Tehran is either "consistent with its findings (or) ... not inconsistent with its findings," suggesting it was content for now with explanations that these activities were not weapons-related.
Iran's U.N. Ambassador Mohammad Khazee said the report "clearly attests to the exclusively peaceful nature of the nuclear program of the Islamic Republic of Iran, both in the past and at present."
The report "also serves to strongly and unambiguously support my country's long-standing position that the allegations raised by few powers against the peaceful nuclear program of the Islamic Republic of Iran have been entirely groundless," Khazee said in written response to the AP.
But the American U.N. ambassador said Friday that report should pave the way for passage next week of a new U.N. Security Council resolution tightening sanctions on Tehran.
"They're increasing their capabilities," U.S. Ambassador Zalmay Khalilzad said. "Not only have the number of centrifuges increased, but they're working on a second-generation, if you like, a more capable centrifuge.
"Things are getting worse in terms of the enrichment part."
Britain and France introduced a council resolution on Thursday - with support from the United States, Russia, China and Germany
- to expand and toughen travel bans and the freezing of assets for more Iranian officials linked to the nuclear effort.