The United States and the European Union said Wednesday that there must be more sanctions against Iran's nuclear programme if diplomacy fails to shift Tehran.

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."

But in the IAEA board's protracted debate on Iran, China insisted that the diplomatic path should be pursued, according to diplomats who attended the closed-door session.

China is one of five veto-wielding members of the UN Security Council. The others -- Britain, France, Russia and the United States -- as well as Germany are involved in talks with Iran on its nuclear programme.

Russia also has been hesitant to sign on to a new UN sanctions regime, but on Monday in Paris after talks with French President Nicolas Sarkozy, Medvedev said that while sanctions were a last resort, he was open to the idea.

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 programme.

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 at the plant.

Iran says it 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.

Iran has also come under fire for rejecting a plan brokered by the IAEA last October whereby Russia and France would use Iran's own stockpile of low-enriched uranium to make the fuel for the research reactor.

Instead, it put forward a counterproposal of its own for a simultaneous fuel swap on Iranian soil, which western countries and the IAEA itself rejects.

"Iran continues to play a cat-and-mouse game with the IAEA," US ambassador Davies told the IAEA board.