The chief of the United Nations nuclear agency urged Iran and North Korea on Monday to prove their nuclear programs are peaceful and also called for tighter controls to halt the globe's "extensive illicit market" in nuclear materials.

In his annual report to the U.N. General Assembly, Mohamed ElBaradei (search) said Iran should suspend its uranium enrichment (search) program "as a confidence building measure" and operated demonstrates clearly the inadequacy of the present export system," he said.

ElBaradei noted that current controls on exports of nuclear materials aren't binding, don't include many countries with growing industrial activities, and don't require sharing information with his agency.

"It is very serious," he told reporters afterward. "We're talking about 25 to 30 companies involved with this in at least 20 to 30 countries — not with the knowledge of their governments — but it shows that there is a lot of cracks in this export control regime which we need to fix quite soon."

For now, the most pressing issue before the nuclear agency is what to do about Iran's moves to enrich uranium. The agency's board of governors will decide on the next steps when it meets Nov. 25 at its headquarters in Vienna, Austria, to consider a report ElBaradei is still writing.

Uranium enriched to a low level can be used to produce nuclear fuel for electricity-generating plants, but if enriched further can be used to make atomic weapons. Iran is not prohibited from enriching uranium under its obligations to the Nuclear Nonproliferation Treaty (search), but is barred from arms-related work.

Britain, Germany and France have warned that most European countries would back the United States' call to refer Iran to the U.N. Security Council if the Iranian government does not abandon all enrichment activities by Nov. 25. Washington, which has accused Iran of trying to build atomic weapons, wants the Security Council to impose economic sanctions.

ElBaradei told reporters Iran should act quickly on suspending enrichment to restore confidence with the international community after previously providing his agency with information "that was at times changing, contradictory, and slow in coming."

On Sunday, Iranian lawmakers shouting "Death to America" unanimously approved the outline of a bill that would force Iran's government to resume uranium enrichment.

But Iran's top nuclear negotiator, Hossein Mousavian, said a compromise was possible. He held out the prospect of Iran suspending building additional facilities to enrich uranium if European countries make good on offers to provide fuel for planned nuclear-powered electricity plants.

ElBaradei said Iran has legitimate needs for power generation, but added, "We need to strike a balance between the right of Iran to use nuclear technology and the concern of the international community that any nuclear program is a peaceful one."

Iran's deputy U.N. ambassador Mehdi Danesh-Yazdi told the General Assembly his country "is determined to pursue its inalienable rights to develop nuclear energy for peaceful purposes." He said negotiations with the Europeans "will bring fruit if mutual understanding, political will and good faith prevail."

He was one of about 20 speakers during a debate on ElBaradei speech that preceded a vote on a resolution supporting the IAEA's "indispensable role" in promoting the peaceful uses of atomic energy "and in nuclear safety, verification and security." The vote was 123-1, with only North Korea opposing the resolution.

North Korea's deputy U.N. ambassador Kim Chang Guk called the IAEA "a political tool of the superpower" and accused the United States of targeting nuclear weapons at his country from Japan and said South Korea can't be trusted because of its nuclear experiments.

ElBaradei said he was a bit frustrated that six-nation talks involving the United States, China, Russia, Japan and the two Koreas were not moving faster in the effort to negotiate a deal for the communist regime to dismantle its nuclear weapons programs in exchange for economic help and security guarantees.

The process is at a standstill because North Korea refused to show up for talks scheduled for September.

"I'm telling the North Koreans again that the international community is ready to look into your security concerns, ready to look into your economic and humanitarian needs. But a prerequisite is for them to commit themselves to full, verifiable, dismantlement of their weapons program — as they say they have a weapons program," he told reporters.

North Korea's Kim said that if the United States "renounces its hostile policy" toward the country "including [its] nuclear threat, it is willing to scrap its nuclear deterrence accordingly."