A report on Iran's program, which the West fears is hiding a covert nuclear weapons program, will now be sent to the Security Council, US ambassador to the IAEA Gregory Schulte said.
A top US official in Washington said the dossier would be brought up next week at the Security Council.
"Iran has not met the conditions at the IAEA" to suspend all enrichment and cooperate fully with inspectors, Under Secretary of State Nicholas Burns told a House of Representatives committee.
"If Iran doesn't respond to words, we believe the world community should entertain the possibility of sanctions," he said.
"But it's going to be incumbent upon our allies around the world to show that they are willing to act," he added.
In Vienna on Wednesday the International Atomic Energy Agency (IAEA) wrapped up a three-day regular meeting that focused on the Iranian standoff.
IAEA director Mohamed ElBaradei said it was still possible to reach a political settlement.
"This is simply a new phase of diplomacy, an extension of diplomatic efforts to find a solution," he said.
Unlike the IAEA, the Security Council has enforcement powers and can impose punitive measures, including sanctions.
Europe and the US have led the drive for action, saying Iran has hidden the truth about its nuclear program and should not be allowed to enrich uranium, which can provide the fuel for civilian reactors but also, in highly enriched form, the material for atomic weapons.
Russian proposal
Russian Foreign Minister Sergei Lavrov, said there was no military solution to the row and cast doubt on the effectiveness of any sanctions against Iran.
Moscow has been trying to broker a compromise under which Iran could enrich uranium in Russia, so that it gets the nuclear fuel but not the technology for making bombs.
Iran has proposed suspending industrial-scale enrichment but doing research work, but the West says even small-scale enrichment is too dangerous.
Iranian security official Javad Vaidi, who led the Iranian delegation, threatened reprisals against the US.
"The United States may have the power to cause harm and pain but it is also susceptible to harm and pain," he said. "So if the United States wishes to choose that path, let the ball roll."
Mr Vaidi reiterated that Iran would press on with small-scale enrichment work despite the IAEA's calls to halt this activity.
"We will continue to exercise our R and D activities based on our right," Mr Vaidi said, referring to research and development.
He said Iran would not, for now, use its key role as an oil supplier as a weapon in the international dispute over its nuclear program but may review the situation later.
Iran is to continue its current level of cooperation with the IAEA, Iranian ambassador Ali-Agsar Soltanieh said.
In Vienna, Mr Schulte said Mr ElBaradei's report "makes clear" that Iran failed to meet IAEA demands in a February 4 resolution to suspend all enrichment and cooperate fully with agency inspectors.
The IAEA reported Iran to the Security Council on that day but asked it to hold off on any action until Mr ElBaradei had made an assessment report.