The US and UK have rejected Iranian proposals to resume talks over its nuclear programme, but major powers are split over possible referral to the UN.
Russia says a compromise offer is still on the table, and China has urged all parties to continue negotiations.
But the UK, France, Germany and the US want the UN Security Council to discuss sanctions against Iran, which denies seeking to build nuclear weapons.
A US official described Iran's offer of new talks as "diplomatic fog".
Iran broke seals on three nuclear facilities last week as a precursor to resuming nuclear fuel research, but says it does not aim to build nuclear weapons.
"The issue of Iran's nuclear weapons program is a classic threat to international peace and security"
However, hopes for a deal receded on Tuesday, with the US and UK standing firm in calling for referral to the United Nations.
"At this point I don't think that we see anything that indicates the Iranians are willing to engage in a serious diplomatic process," US State Department spokesman Sean McCormack said in Washington.
"What they're engaged in is stirring up a lot of chaff. They've started up their diplomatic fog machine here."
Earlier a UK spokesman described Iran's offer as "vacuous".
'Peaceful diplomacy'
However Russian Foreign Minister Sergey Lavrov says a compromise offer is still on the table which could see Iran sending uranium to Russia for enrichment - which would be an obstacle to Iran developing nuclear weapons of its own.
"The question of sanctions against Iran puts the cart before the horse"
The UK, France and Germany are calling for an urgent meeting of the UN nuclear watchdog, the International Atomic Energy Agency (IAEA), next month.
The IAEA could refer the issue to the UN Security Council, which could in turn decide to impose sanctions, but Russia and China appear wary of imposing an embargo.
China said it would do everything to achieve a diplomatic solution, while Russia's Sergey Lavrov said sanctions are not the only solution.
"The Chinese side believes resolving the issue through peaceful diplomatic means is the best choice, benefiting all parties," foreign ministry spokesman Kong Quan said.
IRAN'S NUCLEAR STANDOFF
Iran should help the IAEA collect the maximum amount of information, he said, adding that "more is required of Iran".
Iran's ambassador to Moscow, Gholamreza Ansari, said on Monday that Tehran was still considering the offer to move Iran's uranium enrichment programme to Russia.
Mr Lavrov said the two countries would further discuss that possibility in talks on 16 February.
Meanwhile, Israel's acting Prime Minister Ehud Olmert said his country could not allow a hostile nation to have weapons of mass destruction.
Israel is believed to be the only Middle Eastern country that has a nuclear arsenal.
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