A new report by the UN's International Atomic Energy Agency (IAEA) says Iran has failed to come clean on its uranium enrichment program and that it has serious concerns over alleged research into nuclear weapons.

The critical report released to the UN Security Council on Monday is likely to buttress calls by the US and other Western countries for new sanctions on Iran. Iranian officials say they have cooperated with the IAEA and will continue to enrich uranium for future power generation, not for military purposes.

Last week, US Secretary of State Condoleezza Rice said Iranian banks may face further curbs on international trade under measures designed to pressure Iran into stopping its nuclear program. She said Iran's economy was already suffering as a result of successive sanctions and she warned that Iran faced further sanctions if it failed to fall into line with nuclear inspections, reported the Associated Press. The UN Security Council agreed to a third round of economic sanctions on Iran in March.

European countries have proposed incentives for Iran to suspend enrichment of uranium, a key step toward acquiring nuclear weaponry. These include supplying Iran with enriched uranium for use in nuclear power stations. EU foreign policy chief Javier Solana said Monday he had a new offer to present to Iranian leaders, a revised version of a previous package, Bloomberg reports, though the details of the offer haven't been made public.

The New York Times says that the IAEA report uses unusually blunt language to spell out Iran's lack of cooperation on key issues, though the agency says it still needs more time to produce a definitive assessment of Iran's nuclear activities. The report lists 18 leaked documents – dismissed as forgeries by Iran – that indicate past efforts to develop nuclear missile technology. Last December, US intelligence agencies concluded that Iran had suspended work on designing a nuclear warhead in 2003 due to international pressure, but said it was unclear if this work had resumed.

The [IAEA] report also makes the allegation that Iran is learning to make more powerful centrifuges that are operating faster and more efficiently, the product of robust research and development that have not been fully disclosed to the agency.

That means that the country may be producing enriched uranium — which can be used to make electricity or to produce bombs — faster than expected at the same time as it a replaces its older generation of less reliable centrifuges. Some of the centrifuge components have been produced by Iran's military, said the report, prepared by Mohamed ElBaradei, the director general of the agency, which is the United Nations' nuclear monitor.

Iran's ambassador to the IAEA said the report shows that its nuclear program was peaceful and not for military purposes, reports Reuters, citing an Iranian news agency. Ali Asghar Soltanieh said US allegation of secret missiles programs were "baseless" and that Iran had been vindicated by the report. He didn't comment on the IAEA's criticism of Iran's withholding of information on missile-related activities.

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