Group of Eight foreign ministers stepped up pressure on Iran Tuesday to abandon its suspect nuclear enrichment program or face new sanctions as they held key talks here.

"We urge a heightened focus and a stronger coordinated action including sanctions if necessary on the Iranian regime," Canadian Prime Minister Stephen Harper said to G8 ministers.

"Tehran must halt its nuclear enrichment activities and engage in peaceful dialogue," he told the second day of talks focused on global security.

The ministers from the Group of Eight most developed nations -- Britain, Canada, Germany, France, Italy, Japan, Russia and the United States -- agreed on the need for further punitive measures against the Islamic republic.

But they remained divided over the sort and force of sanctions, according to a US official. Iran has already had three sets of UN measures imposed on it for its continued refusal to rein in its nuclear program.

"There is much at stake," Harper warned, amid Western fears that Tehran is trying to develop a nuclear bomb -- charges which Iran hotly denies.

"If nuclear proliferation leads to the use of nuclear weapons, whether by states or non-state the actors, then no matter where the bombs are set off, the catastrophe will be felt around the world."

US Secretary of State Hillary Clinton affirmed late Monday that China would participate in Iranian sanctions talks.

Beijing has been seen as the most hesitant member of the so-called "P5-plus-1" group -- the five permanent UN Security Council members plus Germany who are negotiating with Tehran.

But Clinton told Canadian television that China will play a role in efforts to forge sanctions at the United Nations against the Islamic regime.

"China is part of the consultative group that has been unified all along the way, which has made it very clear that a nuclear-armed Iran is not acceptable to the international community," she said.

French Foreign Minister Bernard Kouchner said after a G8 working dinner on Monday that he still held out hope for negotiations with Iran, but echoed Japanese Foreign Minister Okada Katsuya's fears that "time was running out."

Katsuya wanted a "stronger response" to Iran's defiance, his spokesman said, but added that China and Russia must "get onboard" to make any UN Security Council decision "effective."

On the second day of talks just outside the Canadian capital Ottawa, G8 ministers were also to discuss an upcoming review of the Nuclear Non-Proliferation Treaty (NPT) at a New York conference in May and a nuclear security summit in Washington next month.

Canadian Foreign Minister Lawrence Cannon said last week that the NPT treaty was under pressure because of the actions of countries like Iran and North Korea.

But Friday's agreement between Moscow and Washington to further reduce their nuclear arsenals "should give us all hope that the future need not be an inevitable descent toward darkness," Harper commented.

The G8 ministers conference sets the stage for G8 and G20 leaders' summits in Muskoka, Ontario and Toronto in June.

Foreign ministers also touched on strategies for attacking the roots of unrest, cracking down on militant bases in Yemen and elsewhere, aid for quake-hit Haiti, and tensions in Bosnia and South America.

Late Monday, Cannon announced an initiative to bolster economic activity in depressed regions along the Pakistan-Afghanistan border, building infrastructure, creating jobs and boosting trade between the two countries.

The plan was developed in consultation with the governments of Afghanistan and Pakistan, the World Bank and the Asian Development Bank.

"All of us have invested heavily, and at considerable cost in lives, in helping Afghanistan to build a peaceful and stable state that will never again be a haven for terrorists," Harper noted.

He and G8 foreign ministers called on Kabul to "assume greater responsibility for its own security," as well as live up to its promises to provide "good governance" and "basic services" to its population.

"We at this table must continue to provide support, while ensuring the Afghan government lives up to its commitments," Harper said.