The decision appeared to be the result of lingering unhappiness by the two world powers about not being informed earlier of plans for such a resolution.
Moscow on Monday had threatened not to back new U.N. sanctions against Iran unless the West gave up its resolution plans. Then on Tuesday it signaled that it was ready to back such a document if it was given substantial input in drafting it before deciding later in the day that it was against it after all, said the diplomats.
Asked why Russia and China were opposed, one of diplomats said Moscow decided to withdraw its support "on principle" and Beijing, which often takes a cue from Russia on the Iran nuclear dispute, followed suit. He, like others accredited to the IAEA, spoke on condition of anonymity because his information was confidential.
A senior Western diplomat said the decision to scrap plans for a resolution was jointly taken by the six powers taking the lead on engaging Iran on its nuclear program - the United States, Russia, China, Britain, France and Germany. He said the six felt that to punish Iran had sent enough of a message.
Gregory L. Schulte, Washington's chief IAEA delegate, said the new sanctions resolution underscores "that Iran's file remains open" and backs the IAEA's right to continue its probe of Tehran's past nuclear program, particularly attempts to make weapons.
But two of the other diplomats, speaking separately, insisted the resolution was scrapped because of Russian and Chinese opposition and said any suggestions of unity on the issue were an attempt to cover up an East-West split among the world powers.
A draft of the resolution, marked "restricted" and made available to The Associated Press reflected Western attempts to ramp up pressure on Iran using the IAEA as a venue.
It said the board "firmly supports" attempts by IAEA Director General Mohamed ElBaradei to shed light on past experiments "that could have a military dimension" - shorthand for alleged attempts by Iran to develop nuclear arms.
It cites ElBaradei in calling such alleged programs "a matter of serious concern." And it "deeply regrets" Tehran's refusal to suspend uranium enrichment - a possible pathway to nuclear arms - despite four Security Council resolutions demanding it do so.
The dispute reflected the often contentious relations between Western powers on the one side and Russia and China on the other about how to deal with Iran's refusal to suspend uranium enrichment and meet other U.N. Security Council demands.
The Security Council voted for a third set of sanctions on Iran on Tuesday. But the language of the resolution was softer than the U.S., Britain and France would have liked because of Russian and Chinese opposition to more severe punishment. And the vote itself was delayed for two hours by the Russian ultimatum warning that it would not back the vote unless Western resolution plans at the IAEA were discarded.
Indirectly acknowledging that Moscow had felt blindsided, Russia's U.N. Ambassador Vitaly Churkin told the AP in New York after the U.N. resolution was approved that "there was a misunderstanding that was cleared."
The draft also calls on on ElBaradei to continue its investigations into the purported nuclear weapons-related experiments, despite Iranian insistence that such allegations are fabrications.
While a Feb. 22 IAEA report said a probe had made progress on other past nuclear activities, it said that Tehran had not responded properly to intelligence forwarded by the U.S. and its allies purportedly showing nuclear weapons technology being developed by Iran.
Iran's nuclear past has been a key topic at IAEA board meetings for the past five years, after revelations that the Islamic Republic had carried out nearly two decades of secret atomic work, some of it potentially linked to weapons research.
On Tuesday, Iran rejected the U.N. resolution imposing new sanctions for its refusal to halt uranium enrichment, calling it "worthless" and "politically-motivated."
"This resolution is contrary to the spirit and articles of the International Atomic Energy Agency. It has been issued based on political motivations and a biased approach. It is worthless and unacceptable," Foreign Ministry spokesman Mohammad Ali Hosseini said, according to the state news agency IRNA.
Iran insists its nuclear program is peaceful and for civilian purposes. It not only continues enrichment - which can produce both nuclear fuel and the fissile core of nuclear warheads - but has also expanded its activities, saying it has a right to the technology for a civilian nuclear program.
As the board meeting convened Monday, ElBaradei urged Iran to stop obstructing his experts on the issue of alleged weapons experiments.
"A full-fledged examination of this issue has yet to take place," he said in comments to the board, indirectly denying Iranian suggestions that an IAEA probe of Tehran's past activities has ended positively.