The United States stepped up international lobbying with US Secretary of State Hillary Clinton pressing key emerging power Brazil to back tougher action by the UN Security Council.
Iran broke its obligations towards the International Atomic Energy Agency by boosting its uranium enrichment without IAEA inspectors monitoring the process, the EU and the US argued at the UN watchdog.
There was "no choice" but for "further, deeper sanctions" against Iran, said Washington's envoy to the IAEA, Glyn Davies. Spain, speaking on behalf of the EU, also called for a "clear response".
"We hope that Iran will change its current course and seek the path of negotiations," Davies told the IAEA's 35-member board of governors holding a regular spring meeting.
"Not doing so leaves the international community no choice but to pursue further, deeper sanctions to hold Iran accountable," Davies said.
The European Union said it would support a fourth round UN Security Council sanctions.
"Iran's persistent failure to meet its international obligations require a clear response, including through appropriate measures," the 27-nation bloc said in a statement.
"The European Union would support action by the UNSC (UN Security Council) if Iran continues not to cooperate with the international community over its nuclear programme. The European Union stands ready to take the necessary steps to accompany this UNSC process."
Before a meeting in Brasilia with US Secretary of State Clinton, Brazilian President Luiz Inacio Lula da Silva warned the international community not to "push Iran into a corner" over its nuclear programme.
"Peace in the world does not mean isolating someone," said Lula, whose country has its own nuclear energy program.
The United States and its allies suspect Iran is trying to build its own nuclear bomb. Iran insists its programme is peaceful.
But it angered western nations by starting to enrich uranium to 20-percent purity last month, before the IAEA could get surveillance equipment in place.
In his first report on the Iranian nuclear dossier, the IAEA's new chief Yukiya Amano complained that while the Islamic republic officially informed the IAEA of its intentions, it started feeding nuclear material into uranium-enriching centrifuges before inspectors arrived in the plant to oversee the process.
Iran says needs the purer uranium to fuel a research reactor that makes radioisotopes for medical purposes.
In a letter to the IAEA this week, Iran insisted it had given adequate notice of its intentions and that the surveillance cameras were running all the time.
But diplomats close to the IAEA noted that the letter made no mention of the fact that inspectors had specifically asked Iran not to begin the process until special adjustments could be made.
The United States is spearheading a campaign for new UN sanctions.
President Barack Obama's administration, which has all but abandoned hopes of a diplomatic engagement with Iran, has increased pressure on a reluctant China to back fresh action.
"While the United States has joined its international partners for more than a year in reaching out to Iran through direct diplomacy, Iran continues to resist all efforts to come to a negotiated settlement or to build any confidence in its intentions," US ambassador Davies told the IAEA board.
"Iran continues to play a cat-and-mouse game with the IAEA," Davies said.
