EU leaders say they are very concerned at Iran's plans to resume sensitive nuclear research in the coming hours.
Iran says its nuclear programme is for peaceful purposes only
Iranian officials say they will remove seals at nuclear facilities, ending a two-year suspension of research.
The German foreign minister described the developments as "very, very ominous", and the Austrian chancellor held open the possibility of sanctions.
Western countries fear Iran's nuclear programme could be used to make atomic bombs, but Tehran denies such a goal.
It says the project is for the peaceful production of energy only.
Talks between Iran and the EU trio of Germany, France and the UK, broke off last August after Iran resumed uranium conversion activity which it had suspended in 2004.
Resuming the research on Monday would mean all of Iran's nuclear activities, apart from uranium enrichment, have been revived.
German Foreign Minister Frank-Walter Steinmeier said the latest move "marks a breach of Tehran's commitments... It cannot remain without consequence".
Austrian Chancellor Wolfgang Schuessel said he was "very concerned" about the developments.
He said the possibility of sanctions against Iran would "in due course be discussed by the EU", but that "that point in time has not yet arrived".
On Sunday talks between Russia and Iran on plans to transfer Iran's uranium enrichment activity to Russian soil ended without major agreement.
The EU and US back the proposal in principle as a safeguard against Iran developing a bomb.
An Iranian official is quoted as saying talks with Moscow will resume in mid-February.
An Iranian foreign ministry spokesman said on Sunday the resumption of nuclear research was Iran's right and would be done under the supervision of international inspectors.
But Hamid Reza Asefi refused to say what kind of research was planned or which sites were involved.
The US has warned Iran it might seek to refer the country to the UN if nuclear research resumes.
The board of governors of the IAEA - UN's nuclear watchdog - is due to meet in March to discuss whether to pass the case to the Security Council, which could impose sanctions on Iran.