The U.N. nuclear agency said Thursday that Iran was producing less nuclear fuel than expected and praised Tehran for "a significant step forward" in explaining past atomic actions that have raised suspicions.

The report is expected to make it more difficult for the United States to rally support for a new round of sanctions against Tehran.

At the same time, the report confirmed that Iran continued to expand its uranium enrichment program, reflecting the Islamic republic's defiance of the U.N. Security Council. Still, U.N. officials said, both enrichment and the building of a plutonium-producing reactor was continuing more slowly than expected.

International Atomic Energy Agency Deputy Director General Olli Heinonen, who brokered the cooperation deal with Iran, highlighted the importance of the agreement, noting that Tehran's past refusal to answer the IAEA's questions triggered Security Council sanctions in the first place.

But he cautioned that Iran still needed to fully implement its commitments, telling reporters that "the key is that Iran ... provides the information that we need" in a time frame that results in clarity about Iran's past suspicious activities by year's end.

There was no immediate U.S. comment. But France, a close U.S. ally on Iran, said cooperation by Tehran was not enough to eliminate the threat of new U.N. penalties.

"As long as there is not a clear ... decision from Iran about the suspension of activities linked to enrichment, we will pursue ... looking into a third sanctions resolution," French Foreign Ministry spokeswoman Pascale Andreani said in Paris.

Drawn up by IAEA chief Mohamed ElBaradei, much of the confidential report obtained by The Associated Press focused on the already publicized action plan finalized just a few weeks ago between the agency and Iran, restating progress in some areas and time frames for Iran to respond to additional questions.

In that plan, Iran agreed to come up to answer the final questions from agency experts by November.

If that and all other deadlines are met and Iran provides all the information sought, the agency should be able to close the file on its more than four-year investigation of Tehran's nuclear activities by year's end, a senior U.N. official said.

He and other U.N. officials -- all speaking on condition of anonymity because they were not authorized to comment to media -- declined to comment, however, on whether a clean bill that banishes suspicions about Iran's former nuclear programs and experiments would be enough to derail the threat of new U.N. sanctions.

The United States and its closest allies said more were needed because of Tehran's defiance of council demands that it mothball its uranium enrichment program and stop building a plutonium-producing reactor. Both can create the product that can serve as the fissile component of nuclear warheads.

Like the joint plan on cooperation between Iran and the agency, the report -- to be considered next week by the 35-nation IAEA board -- said the agency felt that information provided by Iran on past small-scale plutonium experiments had "resolved" agency concerns about the issue.

In Tehran, the official Islamic Republic News Agency cited senior nuclear official Mohammad Saeedi as saying that conclusion "ended all the baseless U.S. accusations against Iran over reprocessing plutonium."

The agency report also noted cooperation on other issues, while specifying that Tehran still needed to satisfy the agency's curiosity about its enrichment technology and traces of highly enriched uranium at a facility linked to the military.

The report also said Iran agreed to study documentation from the agency on the "Green Salt Project" -- a plan that the U.S. alleges links diverse components of a nuclear weapons program including uranium enrichment, high explosives testing and a missile re-entry vehicle.

Diplomats told the AP last year that the agency was made aware of the alleged program by U.S. intelligence. One of the U.N. officials suggested the IAEA might share its confidential documents -- possibly including secret U.S. information -- with Iran in its investigation of the "Green Salt Project," but declined to offer details.

As expected, the report also confirmed that, while Iran continued to expand its uranium enrichment program, it was doing so much more slowly than expected, and had produced only negligible amounts of nuclear fuel that was far below the level usable for nuclear warheads.

One of the U.N. officials also noted that construction of the plutonium-producing reactor at the city of Arak had slowed in recent months.

He said that "design difficulties, getting equipment, materials and components, and fuel technology, plus perhaps some political considerations," could be causing the delay.

The allusion to "political considerations" appeared linked to reports that Iranian officials might be considering stopping construction of the Arak reactor in another sign of good will calculated to blunt the threat of new U.N. sanctions.

Citing unidentified Iranian sources, Jane's Defense Weekly earlier this week said some members of Iran's Supreme National Security Council were pushing for such a move.

That -- along with the months-long slowdown in enrichment activity, plus significant Iranian readiness to cooperate with the IAEA investigation -- could combine to stymie the U.S.-led push for new U.N. penalties, diplomats said.