Iranian, Brazilian and Turkish foreign ministers brokered the deal
Iran has signed an agreement to send uranium abroad for enrichment after mediation talks in Tehran with Turkish and Brazilian leaders.
Correspondents say the plan could revive a UN-backed proposal and may ward off another round of sanctions.
But the BBC's Tehran correspondent says the deal will be viewed with scepticism in Western capitals, as Iran says it will continue enriching uranium.
Meanwhile, France has announced progress at the UN on fresh sanctions.
AFP news agency reported that Israeli officials were accusing Iran of manipulating Brazil and Turkey to stave off sanctions.
The West has long suspected that Iran's nuclear programme is aimed at making weapons - a charge Tehran denies.
Under the deal, Iran's foreign ministry said it was ready to ship 1,200kg (2,645lb) of low-enriched uranium to Turkey, in return for fuel for a research reactor.
The deal does not address the central nuclear issues dealt with by successive UN Security Council resolutions - namely Iran's refusal to halt its enrichment programme and address questions about its past nuclear activities.
The US reacted by saying it still had serious concerns over Iran's nuclear programme, although it did not reject the agreement.
KEY POINTS OF THE DEAL
Iran will notify the IAEA of the details of the agreement within a week
If approved by the Vienna Group, Iran will ship 1,200kg of low-enriched uranium (LEU) to Turkey
The LEU will remain the property of Iran while in Turkey
Tehran and the IAEA may send observers to monitor its security
The Vienna group must then deliver 120kg of nuclear fuel to Iran within a year
Iran may request that Turkey return its LEU "swiftly and unconditionally to Iran
It said the Iranian government "must demonstrate through deeds - and not simply words - its willingness to live up to international obligations or face consequences, including sanctions".
"While it would be a positive step for Iran to transfer low-enriched uranium off of its soil as it agreed to do last October, Iran said today that it would continue its 20% enrichment, which is a direct violation of UN Security Council resolutions," said a White House statement.
Russia welcomed the deal, although President Dmitry Medvedev said further talks were needed on Iran's nuclear programme.
During a trip to Ukraine Mr Medvedev said the fact that Iran apparently still intended to continue its own uranium enrichment would continue to concern the international community.
French Foreign Minister Bernard Kouchner said there had been "some important progress" in talks at the Security Council on fresh sanctions against Tehran.
The UK, for its part, said work on a resolution about imposing new sanctions on Iran would continue until Tehran showed its intentions were peaceful.
The German government said that nothing could replace a deal between Iran and the UN's nuclear watchdog, the IAEA.
Iran's President Mahmoud Ahmadinejad called on world leaders for new talks "with Iran based on honesty, justice and mutual respect".
The EU's high representative for foreign affairs, Baroness Ashton, was ready to meet the Iranian authorities to find a "full and complete" solution to the stand-off, her spokesman said.
Turkish Prime Minister Recep Tayyip Erdogan and Brazil's President Luiz Inacio Lula da Silva were at the talks in Tehran with Mr Ahmadinejad.
Paul Reynolds, world affairs correspondent, BBC News website
Whether this is a breakthrough or a device to try to stop further sanctions remains to be determined.
On the plus side, it appears that Iran is still interested in swapping some of its low-enriched uranium for fuel rods for its medical research reactor in Tehran, which is in need of replenishment.
Sending low-enriched uranium to Turkey would be a good first step but it does not solve the problem, because Turkey cannot produce fuel rods. There therefore needs to be a further agreement with the countries that made an earlier offer to supply them - the US, Russia and France.
And these countries are likely to be very cautious as they fear that Iran will impose conditions that, for them, make a deal impossible.
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