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The International Atomic Energy Agency says it has not resolved questions about a possible military dimension to Iran's nuclear programme.

In its latest report, the UN nuclear watchdog said it had failed to make meaningful progress in assessing Iran's past nuclear activities.

Iran was also continuing to enrich uranium in defiance of a UN Security Council resolution, it said.

The US said Iran could face further sanctions unless it changed course.

Iran says its nuclear programme is aimed solely at civilian atomic energy, but Western nations accuse Iran of seeking to develop a nuclear weapon.

'No credible assurances'

In its report, the IAEA said that Iran was failing to co-operate with its investigators.

Regrettably the agency has not been able to make any substantial progress on the alleged studies
IAEA report

Q&A: Iran and the nuclear issue

In May, the UN watchdog said Tehran was withholding information about projects to develop a nuclear warhead, convert uranium and test high explosives.

It called for access to key sites, documents and officials so that investigators could assess Iran's position that its nuclear work was for peaceful purposes.

But, said the IAEA, no such access had been granted.

"Regrettably the agency has not been able to make any substantial progress on the alleged studies and other associated key remaining issues which remain of serious concern," the report said.

Without greater transparency from Iran, the IAEA would "not be able to provide credible assurances about the absence of undeclared nuclear material and activities in Iran", it added.

Iran says documentation on its alleged projects has been fabricated.

The IAEA also said that Iran was continuing to install new cascades of centrifuges to enrich uranium in defiance of a UN Security Council order.

Around 3,800 centrifuges were now in operation at Iran's enrichment plant in Natanz, an increase of 300 since May, the report said.

Responding to the report, the US said Iran could face more punitive measures.

"The Iranian regime's continued defiance only further isolates the Iranian people," White House spokesman Gordon Johndroe said.

Iran should suspend uranium enrichment or "face further implementation of the existing United Nations Security Council sanctions and the possibility of new sanctions", Reuters news agency quoted him as saying.

The report will be discussed by the IAEA's board of governors next week.