Washington struck a deal on Monday with France, Germany and Britain on a U.N. nuclear resolution that condemns Iran for hiding its atomic program in the past but encourages its new policy of honesty.

The compromise draft resolution of the International Atomic Energy Agency's (IAEA) Board of Governors falls short of what Washington had originally hoped for -- to send Iran to the U.N. Security Council for breaches of the nuclear Non-Proliferation Treaty (NPT), which could have led to economic sanctions.

"The resolution has been tabled," a Western diplomat told Reuters, adding that it would be discussed at Wednesday's IAEA Board of Governors meeting and would likely be acceptable to most of the 35 members of the board.

The latest draft, obtained in full by Reuters, calls for the IAEA's governing board to "meet immediately to consider all options at its disposal" if any further violations of Tehran's international non-proliferation obligations are uncovered.

U.S. negotiators had pushed the Europeans to strengthen the wording of what Washington calls a "trigger mechanism" to warn Iran that if it was guilty of any more violations it may be reported to the U.N. Security Council.

A senior State Department official said the agreed resolution made clear the board would consider reporting Iran to the Security Council in the event of further violations, but without stating that explicitly, which diplomats said made it acceptable to the Europeans and Tehran.

The official said it "welcomes the promises (of transparency) from Iran but makes clear that their past failures and breaches requires them to live up to their promises."

The wording of the trigger had been a sticking point for the United States, which accuses Iran of wanting to develop nuclear weapons. On Friday, the IAEA board adjourned to give the 35 board members time to work out a compromise on the text.

The French, British and Germans -- wanting to encourage Iran to continue with its stated policy of fully cooperating with the U.N. nuclear watchdog rather than merely punish it for past failures -- had tabled two previous resolutions that were rejected by U.S. negotiators as too weak.

The Western diplomat said agreement on the wording was reached in a phone call between U.S. Secretary of State Colin Powell and British Foreign Secretary Jack Straw.

SHARP LANGUAGE

The draft has some sharp language on Iran's nuclear concealment. It "strongly deplores Iran's past failures and breaches of its obligation to comply with...its Safeguards Agreement" under the NPT.

Originally, Washington had pushed the board to pass a resolution that would declare Iran in "non-compliance" with the NPT and would report it to the Security Council. U.S. officials later dropped these demands when it realized there was little support on the board for their inclusion in the resolution.

The resolution follows an IAEA report that found Iran had concealed a uranium enrichment program for 18 years and secretly reprocessed plutonium, useable in weapons.

It said there was "no evidence" of an arms program but the jury was still out as to whether one existed.

The resolution notes "with the gravest concern that Iran enriched uranium and separated plutonium in undeclared facilities, in the absence of IAEA safeguards."

But it "welcomes Iran's offer of active cooperation and openness and its positive response to the demands...in the (September 12 IAEA) resolution" which gave Tehran until October 31 to come clean about the full extent of its nuclear program.

The resolution also "welcomes Iran's decision to suspend all enrichment-related and reprocessing activities and requests Iran to adhere to it." It called for IAEA chief Mohamed ElBaradei to submit a new report to the board in mid-February.

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