President Barack Obama's administration also expressed concern about Iran's alleged human rights abuses and warned Latin American countries to "think twice" about ties with what it calls a major exporter of terrorism.

With a year-end deadline, the administration signaled that time is running out for Iran to seize its offer of diplomatic engagement for resolving nuclear and other issues.

In the last few days it has raised the specter of a fourth round of UN sanctions, which will require the full support of its five negotiating partners -- Britain, France and Germany as well as Russia and China.

Russia and China have been more reluctant to impose sanctions on Iran but have become increasingly critical of Tehran.

"The offer of constructive engagement remains on the table, and we urge Iran to take concrete steps toward this course," the White House said in a statement.

But the White House said Iran must heed the demands of the United Nations, including those of the International Atomic Energy Agency (IAEA).

"If Iran continues to fail to bring its nuclear program into full compliance with the requirements of the United Nations Security Council and the IAEA, there will be consequences," the White House said.

"And we will be consulting closely with our partners to ensure those consequences are credible," it said in a statement.

In a recent censure vote backed by China and Russia, the IEAA called on Iran to stop construction of its second uranium enrichment plant under construction near the central Shiite shrine city of Qom.

The nuclear watchdog has also called on Iran to come clean on its uranium enrichment plant at Natanz, which the West has long feared masks efforts to build a nuclear bomb.

Iran denies the charge, saying it seeks peaceful nuclear energy.

In an interview with Al-Jazeera English television, US Secretary of State Hillary Clinton said the international community will now turn toward using "more pressure, like sanctions" against Iran as it fails to take confidence-building steps.

She cited in particular Iran's balking at an IAEA proposal for Iran to ship abroad low-grade nuclear fuel so it can be further enriched and returned to refuel a Tehran research reactor.

The chief US diplomat also noted doubts over Iran's intentions following the discovery of the secret plant near Qom as well as Tehran's crackdown on peaceful protests against disputed presidential elections in June.

The White House echoed the "grave concerns" from the European Union.

EU leaders backed Friday new sanctions against Iran, warning that Tehran's refusal to negotiate over its nuclear program must be met with a tough response.

"Europe's position is very clear, we need sanctions, this decision has been taken," French President Nicolas Sarkozy told reporters, after two days of talks among the EU's 27 leaders.

The White House said meanwhile that "the United States also remains deeply concerned about the deteriorating human rights situation in Iran," in the wake of disputed elections.

"We continue to call on the Iranian government to end the use of violence and persecution against those who seek to peacefully exercise universal rights, and to abide by its international obligations," it said.

Speaking Friday at a forum on Latin American policy, Clinton warned countries like Venezuela and Bolivia to "think twice" about fostering ties with Iran because of its alleged support for terrorism.

In a sign of Iran's push for closer ties with the mostly leftist governments thriving at the doorstep of the United States, Iranian President Mahmoud Ahmadinejad visited Venezuela, Bolivia and Brazil last month.

A senior State Department official told reporters Clinton's tough line reflected that patience with Iran was running out.

"The clock's ticking," the official warned on the condition of anonymity.

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