The United States, which accuses Iran of secretly developing atomic weapons, has become isolated in its hardline attitude towards Tehran as more countries want to engage rather than punish it, diplomats said on Friday.

On Thursday, Iran's envoy to the UN International Atomic Energy Agency, Ali Akbar Salehi, gave the IAEA a declaration he said "fully discloses" all aspects of Tehran's nuclear programme, which he insisted is entirely peaceful.

The IAEA governing board set an October 31 deadline for Iran to provide it with such a declaration. Failure to do so would have left the agency's board with no choice but to report Iran to the UN Security Council for possible economic sanctions.

But US officials insist Iran is in clear breach of the nuclear Non-Proliferation Treaty (NPT), and if the 35-nation IAEA board agreed, it would have to notify the Security Council.

US Secretary of State Colin Powell told the French daily Le Figaro that Iran's delivery of the declaration was positive, but added that he still did not trust them.

"They have tried to hide their weapons programme from the IAEA and the international community," he said.

Washington had hoped to push the IAEA board to declare Iran in "non-compliance" with its NPT obligations at a November 20 board session. But diplomats said it would be very difficult after Iran made several major gestures this week to show it may want to cooperate with the UN nuclear watchdog.

"Whatever happens now, the winds of engagement are now in favour," a Western diplomat on the IAEA board told Reuters.

On Tuesday, the foreign ministers of Britain, France and Germany brokered a deal with Iran under which Tehran agreed to suspend its controversial uranium enrichment programme and accept a tougher, short-notice IAEA inspection regime.

The diplomat said this deal included an understanding that France, Germany and Britain would not support a finding of NPT non-compliance in November -- provided IAEA chief Mohamed ElBaradei has no shocking revelations in his next Iran report.

Former UN weapons inspection David Albright said the success of the Big Three's mission on Tuesday showed engaging Iran was the superior strategy.

"Iran is responding and I think it calls for the US to at least rethink its isolationist policy for Iran ... which is based on calling them names and isolating them," Albright, who is president of the Institute for Science and International Security, a US-based think-tank, told Reuters.

THE MYSTERIOUS BOMB-GRADE URANIUM

The IAEA found traces of weapons-grade highly-enriched uranium at two sites in Iran, sparking fears that Iran has the technology and know-how to purify uranium for use in a bomb.

Iran claims these traces are the result of contamination from enrichment centrifuges bought abroad on the black market during the 1980s. This explanation has met with scepticism.

The IAEA has asked Iran to list the countries that manufactured the allegedly contaminated parts so it can verify the explanation, but Tehran insists it does not know because it bought them from intermediaries who can no longer be traced.

Diplomats said that as long as Iran gives the IAEA all the information it has, this will not be grounds for non-compliance.

"If they (Iran) have provided the original drawings (of the centrifuges) maybe it is possible to reconstruct the history behind them," said a diplomat, adding that this might suffice.

Another diplomat said: "The more information they give the IAEA, the easier it will be for them. If they (Iran) don't know what country they came from, there are other ways to find out."

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