U.S. President Bush said "the world is united and concerned" about what he called Iran's "desire to have not only a nuclear weapon but the capacity to make a nuclear weapon or the knowledge to make a nuclear weapon."
The eight-page report, obtained by The Associated Press, said that after more than three years of an IAEA investigation of Iran's nuclear program, "the existing gaps in knowledge continue to be a matter of concern."
"Any progress in that regard requires full transparency and active cooperation by Iran," said the report, written by IAEA chief Mohamed ElBaradei.
The finding set the stage for a showdown in the U.N. Security Council, which is expected to meet next week and start a process that could result in punitive measures against the Islamic republic.
But Iranian President Mahmoud Ahmadinejad said no Security Council resolution could make Iran give up its nuclear program.
"The Iranian nation won't give a damn about such useless resolutions," Ahmadinejad told thousands of people Friday in Khorramdareh in northwestern Iran before the IAEA report was issued.
"Today, they want to force us to give up our way through threats and sanctions but those who resort to language of coercion should know that nuclear energy is a national demand and by the grace of God, today Iran is a nuclear country," state-run television quoted him as saying.
Bush said he was not discouraged by Iran's vow to continue despite global pressure, and while he has refused to rule out the possibility of military action against Iran, he emphasized the pursuit of diplomatic efforts.
"I think the diplomatic options are just beginning," he said in Washington.
At the United Nations, Western nations promised to act urgently to introduce a new Security Council resolution next week to demand that Iran abandon uranium enrichment.
John Bolton, U.S. ambassador to the United Nations, said "the United States is ready to take action in the Security Council to move to a resolution. ... We hope that we can get council action just as soon as possible."
Bolton said the resolution should be under Chapter 7 of the U.N. Charter "making mandatory for Iran the existing requirements of the IAEA resolutions, and particularly the resolution the board passed in February." Chapter 7 resolutions can be enforced by sanctions, or militarily.
He said the IAEA report shows that Iran "has accelerated its efforts to acquire nuclear weapons although, of course, the report doesn't make any conclusions in that regard."
"I think the evidence of Iran's efforts to acquire nuclear weapons, its extensive program to achieve a ballistic missile program of longer and longer range and greater accuracy constitutes a classic threat to international peace and security, especially when combined with Iran's long status as the world's leading state sponsor of terrorism," Bolton said.
The report said Iran's claim to have enriched small amounts to a level of 3.6 percent — fuel-grade uranium as opposed to weapons-grade enriched to levels above 90 percent — appeared to be true, according to initial IAEA analysis of samples.
Uranium conversion — an activity linked to enrichment — "is still ongoing," said the report, adding that more than 120 tons have been converted over the past eight months. Were it used for weapons, that amount would be enough for more than 15 crude nuclear bombs, according to experts.
In one of the few recent developments in the IAEA's inquiry, the report concluded that Iran used undeclared plutonium in conducting small-scale separation experiments.
"The agency cannot exclude the possibility ... that the plutonium analyzed by the agency was derived from source(s) other than declared by Iran," the report said. Plutonium separation is one of the suspect "dual use" activities that could be used for a weapons program.
But the agency was stonewalled by Iran's refusal to give more information on other key issues — details of its centrifuge programs that are used to enrich uranium, information on drawings that show how to form fissile uranium into warheads, and apparent links between Iran's military establishment and what it says is a civilian nuclear program.
The report formally served notice that Tehran had shrugged off a 30-day deadline to meet council demands. As such, it opened the way for further council steps, including the potential threat of sanctions and military action if Iran continues to defy the international community.
Russia: Door to negotiation not closed
Secretary of State Condoleezza Rice won broad support from NATO allies for a tough diplomatic line on Iran.
However, NATO foreign ministers meeting in Sofia, Bulgaria, did not offer any specific threat of sanctions against Iran, in part to avoid a rift with Russia and China. While Russia and China have been reluctant to endorse sanctions, the council's three other veto-wielding members say a strong response is in order.
Russian Deputy Foreign Minister Sergei Kislyak said it was premature to comment on the IAEA report.
"We will study this report very carefully with the aim of agreeing a position and possible future steps to resolve the issues surrounding the Iranian nuclear problem," the Interfax news agency quoted him as saying.
French Foreign Minister Philippe Douste-Blazy said the IAEA's report was "a worrying situation for the entire international community," but he added that the message to Iran was "the door to negotiation is not closed."
Iran's U.N. ambassador, Javad Zarif, said Thursday that Tehran will refuse to comply with the Security Council even if its request is turned into a demand through a resolution because its activities are legal and peaceful. Enrichment can be used to generate fuel or make the fissile core of nuclear weapons.
"If the Security Council decides to take decisions that are not within its competence, then Iran does not feel obliged to obey," he said in New York.
As late as Thursday, Russian President Vladimir Putin questioned the primacy of the council, insisting the IAEA should continue to play a central role in the dispute. "It mustn't shrug this role from its shoulders and pass it on to the U.N. Security Council," Putin said.
But a top French diplomat laid out a starkly contrasting position that also reflects U.S. and British views: The Security Council should not only have the main say in dealing with Iran but also should start considering how to increase the pressure. But, the diplomat said, a U.N. resolution enforceable by military action would not automatically mean resorting to such action.
The Security Council statement a month ago gave Iran until Friday to suspend all activities linked to enrichment because it can be used to make the highly enriched uranium used in the core of nuclear warheads.
Instead of complying, Iran — which says it seeks the technology only to generate electric power — has upped the ante in recent weeks, announcing it had for the first time successfully enriched uranium and was doing research on advanced centrifuges that would let it produce more of the material in less time.