The top diplomats of Russia and the United States on Thursday hailed major progress on a new accord to slash the nuclear arsenals of the Cold War-era foes and predicted a deal would be clinched soon.

Russian and US negotiators have been holding talks in Geneva to agree a replacement to the 1991 Strategic Arms Reduction Treaty (START), which expired in December, but have so far failed to reach a final agreement.

"We are making substantial progress on the new START treaty, that's the word from our negotiators in Geneva," US Secretary of State Hillary Clinton announced after meeting with her Russian counterpart Sergei Lavrov in Moscow.

"And the results of the latest negotiation rounds lead us to believe we'll be reaching a final agreement soon."

Lavrov said: "We are at the end of the final straight and we hope that very soon the negotiators will announce that their work has been completed."

Negotiators failed to agree a successor treaty by the target of the end of 2009 agreed by US President Barack Obama and Russia's Dmitry Medvedev and the issue risks becoming an embarrassment to the "reset" in ties if not settled soon.

While some media reports have said the search for a new treaty has been stymied by major policy differences between the United States and Russia, neither Clinton nor Lavrov betrayed any hint of a dispute.

US State Department spokesman Philip Crowley said: "It's down to one or two items. Progress has been made in recent days."

Clinton will meet Medvedev on Friday and also hold talks with Russian Prime Minister Vladimir Putin, seen by most as still Russia's de-facto number one.

However a possible bone of contention emerged when Clinton said it would be premature for Russia to launch Iran's first nuclear power station amid the dispute over its nuclear programme.

Putin had earlier announced the station -- being built by Russia in the southern city of Bushehr -- should come online in the summer.

Clinton said that in the absence of reassurances on the peaceful nature of the Iranian nuclear drive "it would be premature to go forward with any project at this time because we want to send an unequivocal message to the Iranians."

She said while the United States remained committed to diplomacy on ending the standoff, a "solution" was required. Lavrov however made clear that the opportunities for diplomacy on Iran were far from exhausted.

Crowley played down the differences, saying "it is not a big deal. Our concern is not about what Russia's done, our concern is about the signal it sends to Iran."

Progress on a disarmament treaty would provide Medvedev and Obama with much-needed proof they have succeeded in improving relations after ties became mired in distrust under George W. Bush's presidency.

The Russian media has reported the two presidents would like to sign the final agreement in an Eastern European capital before the United States hosts a nuclear security summit from April 12-13.

But The New York Times reported last week that talks had hit a hitch, saying Obama was frustrated that Medvedev was linking the disarmament treaty with a dispute on US plans to install missile defence facilities in Eastern Europe.

Obama and Medvedev in July agreed the new treaty should slash the number of warheads on either side to between 1,500 and 1,675. The United States currently has some 2,200 nuclear warheads, while Russia is believed to have about 3,000.

The official reason for Clinton's two-day visit is a meeting of the Middle East diplomatic quartet, a gathering that has grown in importance after Israel announced the construction of 1,600 new settler homes in annexed East Jerusalem.