The UN atomic agency has bridged sharp differences and is expected to turn down Iran's request for help in building a nuclear reactor that the West fears could provide plutonium for weapons, diplomats said on Wednesday.
The United States and the European Union argue that Iran, suspected of seeking nuclear weapons and threatened with United Nations sanctions, has no right to technical aid for the Arak reactor.
But the Western states have struggled to persuade non-aligned countries at an ongoing meeting in Vienna of the International Atomic Energy Agency's 35-nation board of governors.
The non-aligneds, led by Cuba, say Iran should get the aid it has requested as the IAEA has certified the project is not a proliferation risk. They have also invoked the principle of the transfer of peaceful nuclear technology to developing countries.
Divisions caused a deadlock from Monday to Wednesday at the board meeting on technical co-operation, which has to recommend an aid package that is then rubber-stamped by an IAEA board political meeting.
But diplomats said that the board was now expected to approve on Thursday a list of some 800 aid projects for the coming two years, but to drop the item requesting safety expertise for the Arak reactor.
US ambassador Gregory Schulte told reporters the expected consensus was due to "widespread mistrust of Iran's nuclear program and the risk of plutonium being diverted from this reactor for use in a weapon."
Another Western diplomat said that "Iran was very isolated," in its request for technical help for a reactor to make medical isotopes.
Many developing countries "didn't want Iran to jeopardise the (IAEA's) technical co-operation program," the unnamed source said.
But several diplomats from developing countries disagreed, saying that Iran had been "realistic" and could resubmit its proposal for safety expertise for the heavy-water reactor it is building at Arak, 200 kilometres (120 miles) south of Tehran.
"Iran has made it clear that they are proceeding with building the reactor but wanted to make clear their concern about safety," one non-aligned diplomat told AFP.
Iranian ambassador Ali Asghar Soltanieh had complained on Tuesday that a strictly technical matter was being politicised.
But a diplomat from a non-aligned state said: "A compromise has been struck," namely to let the board handle the decision as a political matter in order not to jeopardise the co-operation program.
The United States and the European Union, as well as Australia and Canada, are ready to accept the aid package, including seven less controversial programs for Iran, but have balked at help for the Arak reactor.
"The reactor, once completed, will be capable of producing plutonium for one or more nuclear weapons each year," Schulte told the board on Monday.
Schulte said the IAEA secretariat had promised to monitor the remaining projects in Iran to ensure they "will not further Iran's efforts to develop enrichment, reprocessing or heavy water projects," such as providing training that could be used for such sensitive nuclear fuel work.