UN chief Ban Ki-moon will hold talks Thursday on Iran's disputed nuclear program with the head of the UN atomic watchdog, who is expected to issue a damning report that could pave the way for tougher sanctions against Tehran.

The meeting comes before Mohammed El-Baradei, director of the International Atomic Energy Agency, releases his report that is expected to formally confirm Iran is pressing ahead with sensitive enrichment work in defiance of the UN Security Council.

Iran ignored a UN deadline Wednesday to halt nuclear reprocessing efforts, with President Mahmoud Ahmadinejad defending the program as vital to his country's progress.

The deadline was set by the UN Security Council on December 23 when it imposed sanctions and gave the IAEA 60 days to declare whether Iran has imposed a "full and sustained suspension" of uranium enrichment.

Before his meeting with El-Baradei, Ban, in Berlin for talks on Middle East peace efforts, called on Iran to reconsider and return to the negotiating table.

"I would strongly urge the Iranian authorities to comply, first of all fully with the Security Council resolution, and continue to negotiate with the international community," the UN chief said in remarks posted on the UN website.

El-Baradei signaled earlier that his findings to the Security Council, due out by Friday, would conclude Iran was speeding ahead with its uranium enrichment project -- a process US and European governments fear is aimed at making nuclear weapons.

"Short of a major change of heart, I would report that Iran has not complied with the demand of the international community to suspend," El-Baradei told the Financial Times earlier this week.

Iran showed no sign of an about-face when Tehran's chief nuclear negotiator Ali Larijani met El-Baradei in Vienna on Tuesday.

It remains unclear what further penalties Iran faces for failing to obey the UN deadline, as major powers previously have struggled to forge a consensus on the issue.

The United States will likely push for stricter sanctions than the relatively limited measures imposed so far, while Russia and China may prove reluctant to widen economic sanctions.

The limited sanctions adopted in December specifically target trade and officials involved in Iran's nuclear and ballistic missile programs.

In Washington, the State Department said US Deputy Secretary of State John Negroponte will travel to major Asian capitals next week for talks likely to cover Iran and North Korea's nuclear programs.

The number two US diplomat planned to visit Japan, China and South Korea.

In Iran, Ahmadinejad said the disputed nuclear program was crucial for his country's development and would not be relinquished.

"It is worth it, even if we shut down other activities for 10 years and focus on this issue," said Ahmadinejad, without specifying which areas could be affected.

US Secretary of State Condoleezza Rice re-affirmed a US offer, first made last May, to end a 27-year rupture in American-Iranian relations if Tehran complies with the UN conditions.

"We offered to reverse 27 years of policy to engage in the context of the six (parties), and I said I would meet with my Iranian counterpart any place, any where, any time if they suspend," she said.

Amid speculation Washington was preparing for possible military action against Iran, Rice later told CNN that the United States was not seeking conflict.

"Let me just say here, publicly, the United States has no desire for confrontation with Iran," Rice told CNN.

She said the US government was ready to "talk about anything" and added: "We have, in fact, even under these circumstances, we've cooperated some in Afghanistan and I think that was useful."

The Security Council was due to hold Friday public debate on the general issue of non-proliferation in which Iran could be brought up, but the meeting is not specifically on the Iranian case.

The United States and its European allies believe Tehran is using its nuclear energy program to secretly develop a nuclear arsenal. But Tehran denies this, saying it is only seeking to generate nuclear energy.

PHOTO CAPTION

UN Secretary General Ban Ki-Moon of South Korea addresses a press conference at the foreign ministry in Berlin. (AFP)

Reuters