Last week, US and European officials said that to dissuade Russia from blocking UN action, Moscow would be permitted to continue work on the reactor at Bushehr in south-western Iran even if the UN Security Council imposed sanctions on Tehran for its nuclear program.
But diplomats and US officials said on Monday that some Europeans now agree the draft sanctions resolution should ban Russia from fuelling the reactor.
Washington wants to halt all work on the project, worth about $800 million to Russia. "We are pushing for no exemptions," a US official said.
Some Europeans are concerned Russia will see the dispute as a sign of bad faith and seek to challenge other key aspects of the major powers' common position on Iran.
Maintaining unity among the five veto-wielding Security Council members -- the United States, Britain, France, Russia and China -- plus Germany has been central to efforts to curb Iran's nuclear ambitions.
Agreement on a resolution is still eluding the major powers a week after Britain, France and Germany began working on a draft.
One European diplomat said if disputed issues are not soon resolved, the Europeans may circulate their draft to Russia and China without US support.
CARGO INSPECTIONS?
The United States is also said to be pushing for inspections of cargo going in and out of Iran, as was done recently with UN sanctions imposed on North Korea.
But Europeans say Iran does not merit this treatment because its nuclear development is not nearly as advanced as that in North Korea, which recently tested a nuclear device.
State Department spokesman Sean McCormack said there was "widespread agreement, although not total agreement," among the United States and its allies on a proposed resolution.
He told a news briefing he did not expect a completed resolution this week, but the issue would likely dominate the Security Council for the next several weeks.
France's UN Ambassador had hoped for a text by the end of last week, while his British counterpart predicted the council would get the draft early this week.
The resolution would impose sanctions, including bans on nuclear and missile co-operation, after Iran ignored a Security Council demand to suspend uranium enrichment by Aug. 31.
Iran insists it only seeks to produce nuclear energy but Washington and its allies say Tehran is developing weapons.
A European diplomat said until recently there was a common US-European understanding that Bushehr should be exempted for the "political expediency" of guaranteeing Russian support for the sanctions resolution.
The strategy was to start off with limited sanctions, then seek tougher penalties if Iran continued to refuse to suspend enrichment.
But US officials, fearing the council may only act on one sanctions resolution, seem determined to make the draft now under consideration "as tough as possible," the diplomat said.
Meanwhile, diplomats in Vienna -- headquarters of the UN nuclear watchdog agency -- said Iran had expanded its nuclear program by initiating a second batch of centrifuges at a pilot nuclear fuel plant.

Copyright Reuters, 2006