The report from Mohamed ElBaradei, the head of the U.N.'s nuclear watchdog agency, also faulted Tehran for blocking IAEA efforts to probe suspicious nuclear activities, saying that meant it could not "provide assurances about ... the exclusively peaceful nature" of its atomic program.
And, in new and worrying phrasing, it expressed concern about its "deteriorating" understanding of unexplored aspects of the program, despite four years of a probe sparked by revelations that Tehran had been clandestinely developing enrichment and other nuclear activities that could be used to make weapons for nearly two decades.
Iran dismissed the report Wednesday and argued it had provided the agency's inspectors with adequate access to the country's nuclear facilities, according to the state IRNA news agency.
The report, one of a series keeping the IAEA's 35-nation board and the U.N. Security Council up to date on the agency's monitoring efforts, was posted simultaneously on the IAEA internal website and handed over to the president of the Security Council for distribution among its members.
"The International Atomic Energy Agency's report that Iran is continuing to defy the demands of the Security Council makes it probable that new, tougher sanctions will be imposed," said CBS News foreign affairs analyst Pamela Falk.
A senior U.N. diplomat, who demanded anonymity because he was not authorized to publicly comment on the report, suggested that the shrinking hole left for inspections by Iran's rollback of previous monitoring agreements was potentially as worrying as its defiance on enrichment.
In Washington, Undersecretary of State Nicholas Burns said that although he has not read the report, he was confident that it confirms Iranian non-compliance with U.N. Security Council requirements, including Iran's refusal to accept international inspections at uranium enrichment facilities.
"Iran is out of compliance. Iran is thumbing its nose at the international community," Burns said. "We're not going to accept limited enrichment, not going to accept that 1,300 centrifuges can continue to spin."
The brevity of the four-page report indirectly reflected the lack of progress agency inspectors had made clearing up unresolved issues, among them; Iran's possession of diagrams showing how to form uranium into warhead form; unexplained uranium contamination at a research facility; information on high explosives experiments that could be linked to a nuclear program and the design of a missile re-entry vehicle.
Additionally, the restricted report, obtained by The Associated Press, noted Iran's continued refusal to let inspectors visit a heavy water reactor now under construction at Arak and linked facilities since unilaterally curtailing an agreement with the agency earlier this year. Once completed, sometime in the next decade, that complex will produce plutonium waste, which, like enriched uranium, could be used to make nuclear weapons.
"The agency ... remains unable to make further progress in its efforts to verify certain aspects relevant to the scope of nature of Iran's nuclear program." the report said. "Unless Iran addresses the long outstanding verification issues ... the agency will not be able to fully reconstruct the history of Iran's nuclear program and provide assurances about the absence of undeclared nuclear ... activities in Iran or about the exclusively peaceful nature of that program."
As the report was released, the U.S. Navy staged its latest show of military force off the Iranian coastline on Wednesday, sending two aircraft carriers and landing ships packed with 17,000 U.S. Marines and sailors to carry out unannounced exercises in the Persian Gulf.
But as former state department official Robert Einhorn points out, the Iranians know the American military has all it can handle right now in Iraq, reports CBS News national security correspondent David Martin.
"I think the Iranians probably regard the prospect of military action against them as remote as this stage," Einhorn said.
The carrier strike groups led by the USS John C. Stennis and USS Nimitz were joined by the amphibious assault ship USS Bonhomme Richard and its own strike group, which includes landing ships carrying members of the 13th Marine Expeditionary Unit.
The Navy said nine U.S. warships passed through the narrow Strait of Hormuz on Wednesday. Merchant ships passing through the busy strait carry two-fifths of the world's oil exports.
Aircraft aboard the three carriers and the Bonhomme Richard were to conduct air training while the ships ran submarine, mine and other exercises.
The maneuvers came just two months after a previous exercise in March when two U.S. carrier groups carried out two days of air and sea maneuvers off the Iranian coast.
Before the arrival of the Bonhomme Richard strike group, the Navy maintained around 20,000 U.S personnel at sea in the Gulf and neighboring waters.
Meanwhile, the United States, angered by suggestions from ElBaradei that Iran should be allowed to keep some elements of its uranium enrichment program, wants to formally protest his statements, diplomats said.
They said such a concession could undermine U.N. Security Council attempts to pressure Tehran to fully scrap enrichment.
The diplomats, who demanded anonymity because of the delicate nature of the issue, spoke to The Associated Press Tuesday, before ElBaradei's latest report was released.
Their revelations exposed a hardening of positions on how to deal with Iran's determination to expand its enrichment program, a potential pathway to nuclear arms. The diplomats said the U.S. was considering a formal diplomatic protest.
ElBaradei has gone public with his view that it is too late to try and force Tehran to scrap its enrichment program — as demanded by the Security Council — and has argued instead for containing it with a view to preventing its further expansion.
"I believe that demand has been superseded by events," ElBaradei told Spain's ABC newspaper. Instead, he reportedly said, "the important thing now is to concentrate on Iran not taking it to industrial scale."
Iran's ultimate stated goal is running 54,000 centrifuges to churn out enriched uranium — enough for dozens of nuclear weapons a year, should Tehran choose to go along that route.
Some members of the agency's decision-making 35-nation board share ElBaradei's view. But the United States and its closest board allies, including Britain, France, Australia, Canada and Japan, fear such comments could weaken unified Security Council resolve on punishing Iran with further sanctions should Wednesday's report fulfill expectations and state that Tehran continues to defy the council on enrichment and other nuclear activities.