Sarkozy and Gates "agreed that the time has come for the adoption of strong sanctions, in the hope that dialogue will be resumed," an official at the French presidency said after the one hour meeting between the two officials.
Iran said earlier it has told the International Atomic Energy Agency (IAEA) that it has stepped up its uranium enrichment to 20 percent, which if confirmed would take it closer to a capability to make a key element for a nuclear bomb.
France and the United States are among Western nations which accuse Iran of seeking to build a nuclear weapon. Iran insists its nuclear programme is to make energy.
The Elysee official said that Sarkozy and Gates had agreed that "the hand held out (by the West), has not been taken" by Iran.