The draft is being crafted by envoys from France, Britain and Germany -- the three countries that have been spearheading failed talks to persuade Iran to scale back its nuclear ambitions -- in consultation with the United States.
The envoys would not discuss the details of the gradual sanctions being considered.
But officials in Washington said a first set of punitive measures was likely to focus on banning the supply of material and funding for Iran's ballistic missile and nuclear programs. Other steps could include asset freezes and travel bans on nuclear and weapons scientists.
"I expect that Iran will be coming (before the council) fairly soon," Japan's UN envoy Kenzo Oshima, the president of the 15-member council for October, told reporters Thursday. "It depends on the progress of consultations among key interested countries. But nothing has been discussed yet."
"It's not an easy resolution. It's very technical," France's UN envoy Jean-Marc de La Sabliere said Thursday.
He said he hoped a draft could be discussed by envoys of the council's five permanent members -- the so-called P5: Britain, France, China, Russia and the United States -- plus Germany Friday.
A Western diplomat said he did not anticipate a draft to be submitted to the full council before next week.
"We will have a few days between the P5+1 meeting and the consultations (by the full council) so the Russians and Chinese have time to digest the draft," he added.
Last week senior diplomats from Britain, China, France, Germany, Russia and the United States -- finalised a preliminary list of possible sanctions and directed their UN envoys to begin drawing up a sanctions draft.
Their decision came after the European Union concluded after several rounds of fruitless talks with Iran that the issue must be handed back to the Security Council.
But while the six powers agreed on the need for sanctions against Tehran, Russia and China, which both have important economic ties to Iran and traditionally reluctant to use sanctions as a diplomatic tool, are likely to oppose biting sanctions.
Russia's UN envoy Vitaly Churkin indicated earlier this week that an accord on a draft would take some time.
On Thursday, Iranian President Mahmoud Ahmadinejad repeated in a speech in Islamshahr, south-west of Tehran, that his country would not back down.
"The enrichment of uranium and having nuclear fuel are among the main demands of Iranian nation," he added in a speech broadcast live on state television.

Copyright AFP (Agence France-Presse), 2006