The latest talks between European Union (EU) foreign policy chief Javier Solana and Iran’s top nuclear negotiator Ali Larijani had failed to make headway over the key enrichment issue, he said.
"All the evidence we have through the Solana-Larijani talks and in terms of what the Iranian leaders are saying is that they are not prepared to undertake a suspension," he said, asking to remain anonymous.
Preparations were now underway to table a draft resolution at the United Nations Security Council in New York under article 41 of the UN Charter which allows for economic sanctions, he added.
"Unless there is a sudden unexpected change of heart by the Iranians, we can expect this to move to New York in the coming week or so," he added.
Iran maintains that it has a right to develop nuclear technology for civilian power generation purposes, but its conduct has raised suspicions among many Western nations that it is trying to covertly build an atomic bomb.
Enrichment is one way of fuelling a nuclear reactor but the process, when taken to advanced levels, can be used to build the core of a weapon.