Representatives of the six major powers negotiating with Iran over its nuclear programme will meet in Brussels later on Friday.
The head of the UN atomic watchdog has urged Iran to accept a deal over its nuclear programme by the end of the year, and "move beyond sanctions".
They are to discuss their response to Iran's rejection of a key part of a deal that would allow Tehran to continue to develop a nuclear reactor.
Mohammed ElBaradei said the ball was "very much in the Iranian court".
On Wednesday Tehran rejected a deal designed to stop it from being able to make a nuclear weapon.
He was speaking as the six major powers negotiating with Tehran were holding talks in Brussels.
Iran's suggested compromise is likely to be rejected, correspondents say.
They are discussing their response to Iran's rejection of a key part of a deal that would allow it to continue to develop a nuclear reactor.
The meeting involves the UN Security Council's permanent members - Britain, China, France, Russia and the United States - plus Germany.
A compromise suggested by Iran is likely to be rejected, correspondents say.
'Clear message'
Friday's meeting involves the UN Security Council's permanent members - Britain, China, France, Russia and the United States - plus Germany.
US President Barack Obama said on Thursday the US and its partners would discuss "a package of potential steps" they could take if Iran snubbed a uranium enrichment deal.
The West fears Iran is trying to develop a nuclear weapons capacity. Iran insists its nuclear programme is for entirely peaceful purposes.
Sanction was the literature of the 60s and 70s... and I think they are wise enough not to repeat failed experiences Manouchehr MottakiIranian Foreign Minster
Mr Obama said Iran needed to get a "clear message" that, if it failed to take advantage of such opportunities, it was "making itself less secure".
The West fears Iran is attempting to develop nuclear weapons. Iran insists its nuclear programme is for entirely peaceful purposes.
On Monday, the UN's nuclear watchdog said it needed "more clarification" about the purpose of a recently declared uranium enrichment facility near the city of Qom.
The International Atomic Energy Agency (IAEA) also said in a new report that the development of the plant raised concerns about other possible secret sites.
Guarantee
On Wednesday, Iranian Foreign Minster Manouchehr Mottaki said his country had misgivings about the deal brokered by the IAEA in October that envisages Iran sending about 70% of its low-enriched uranium to Russia and France, where it would be processed into fuel rods for a research reactor in Tehran.
Mr Mottaki suggested a deal that the West and Russia are likely to reject
Mr Mottaki suggested a deal that the West and Russia are likely to reject
Mr ElBaradei - who is standing down as head of the International Atomic Energy Agency (IAEA) on 1 December - was speaking in Berlin.
"It is a unique opportunity to move from sanctions and confrontation to the process of building... trust," he said.
"I believe frankly the ball is very much in the Iranian court," he added. "I hope they will not miss this unique but fleeting opportunity."
On Wednesday, Iranian Foreign Minster Manouchehr Mottaki said his country had misgivings about the deal brokered by the IAEA.
It envisages Iran sending about 70% of its low-enriched uranium to Russia and France, where it would be processed into fuel rods for a research reactor in Tehran.
Mr Mottaki suggested Iran would instead agree to exchange its uranium for an equivalent amount of nuclear fuel, but only on its own territory. Tehran wanted to guarantee it would receive fuel it had contracted for, he said.
Mr Mottaki suggested Iran would instead agree to exchange its uranium for an equivalent amount of nuclear fuel, but only on its own territory. Tehran wanted to guarantee it would receive fuel it had contracted for, he said.
Responding to the comments, President Obama said the US and its allies had begun discussions "about the importance of having consequences".
On Thursday US President Barack Obama said Washington and its partners would discuss "a package of potential steps" they could take if Iran snubbed a uranium enrichment deal.
"The dual-track approach requires Iran to get a clear message that, when it fails to take advantage of these opportunities, that it in fact is not making itself more secure, it is making itself less secure."
Mr Obama said Iran needed to get a "clear message" that, if it failed to take advantage of such opportunities, it was "making itself less secure".
"Over the next several weeks, we will be developing a package of potential steps that we could take that would indicate our seriousness to Iran."
But Mr Obama said he still hoped Iran would change its mind.
"I continue to hold out the prospect that they may decide to walk through this door. I hope they do," he said.
"But what I'm pleased about is the extraordinary international unity that we've seen. I think it's an indication that we've taken the right approach."
NUCLEAR FUEL CYCLE Mined uranium ore is purified and reconstituted into solid form known as yellowcakeYellowcake is converted into a gas by heating it to about 64C (147F) Gas is fed through centrifuges, where its isotopes separate and process is repeated until uranium is enrichedLow-level enriched uranium is used for nuclear fuelHighly enriched uranium can be used in nuclear weapons In depth: Nuclear fuel cycle
Speaking during a visit to the Philippines, Mr Mottaki dismissed the threat of further international sanctions.
"Sanction was the literature of the 60s and 70s," he said.
"Well, in the last four years they have the experience of doing so. And I think they are wise enough not to repeat failed experiences. Of course, it's totally up to them," he added.
Mr Mottaki said Tehran was ready "to have further talks within the framework which is presented".
"It's not our proposal to have a swap," he added. "They raised such a proposal and we described and talked about how it could be operationalised."
Later, the Russian government insisted that there was still "every chance" of reaching a deal with Iran on enrichment, and denied that it had been discussing further sanctions with Washington.
"As far as we know, there has so far been no final official answer from Tehran," Russian foreign ministry spokesman Andrei Nesterenko said in a statement. "It is important to let diplomacy work, and superfluous emotions only harm the situation."
"There is currently no discussion on working out additional sanctions against Iran at the UN Security Council," he added.
During Mr Obama's recent visit to China he received no assurances that it would support new sanctions against Iran at the UN Security Council. France and the UK want Iran to accept the deal.
