After day-long consultations late yesterday, the Council also postponed action on demand by Russia, France and China to ease highly intrusive inspections of Iraq's nuclear facilities.

``There was no consensus to modify the sanctions regime,'' Council president Hisashi Owada of Japan said after the meeting which was called for a periodic review.

``Members will continue to consult on the possibility of further Council action in connection with International Atomic Energy Agency (IAEA) report," he added.

``Sanctions will not be lifted because Iraq has not complied. That was the result of the Security Council review,'' American Ambassador Bill Richardson said.

The Council did not take a formal vote. Since the US has veto, any resolution calling for easing of sanctions will require Washington'sconsent.

Observers said the continuation of sanctions does not reflect consensus in the Council as while US and Britain are against easing of the sanctions, an overwhelming majority of members want the same. Russia has circulated a draft resolution among the Council members which would acknowledge progress on nuclear disarmament but allow IAEA to undertake further inspections in case it gets new information.

The Russian draft yesterday received backing from China and France.It is not clear when and in what form the resolution would come before the Council but Council President Owada said a decision is expected soon.

Chinese Deputy UN ambassador Shen Guofang made the most positive statement when he said the weapons inspections should end soon.

Russian ambassador Sergey Lavrov hailed the IAEA report which said no evidence was found that Iraq is still secretly building nuclear weapons.French ambassador Alain Dejammet's stand was rather ambiguous. He opposed lifting sanctions at this time but said theCouncil should take note of progress in the area of Iraq's nuclear disarmament.

Diplomats say the position taken by Russia, China and, to some extent, France has put US in a delicate situation for its continued obstruction could lead to further erosion of sanctions if others major powers start ignoring them.

During his presentation, Al Shhaf reiterated Iraq's position that Baghdad has complied with UN resolutions but the US and Britain were using the inspection regime to maintain sanctions which is ``their agenda.''

US acknowledges progress, but wants more

The United States has acknowledged for the first time that Iraq had made progress on nuclear weapons and in its cooperation with UN arms inspectors but said it was premature to lift sanctions. Bill Richardson said ``based on the reports we have received, there is little sentiment to lift sanctions'' imposed on Iraq shortly after its troops invaded Kuwait in 1990. ``We, the United States acknowledge progress in the areas of access topresidential and sensitive sites. There appears to be some progress in the nuclear file. However, we believe it is premature to close the nuclear file,'' Richardson said. He said more information was needed on nuclear enrichment, design and imports to Iraq in the past, but he said much needed to be done on chemical and biological weapons as well as on human rights and accounting for prisoners taken from Kuwait when Iraq occupied the emirate in 1990. ``Iraq still has many miles too go,'' he said.