The International Atomic Energy Agency's 35-nation board of governors unanimously approved a resolution saying, "outstanding issues relating to Iran's nuclear program have yet to be resolved."
But it did not mention reporting Tehran to the U.N. Security Council, which could impose economic sanctions, over concerns that the move would only harden Iran's stance, according to the Associated Press.
The governors did say that Iran must freeze all nuclear fuel-related activities and called on the agency to verify Tehran's compliance, Reuters reported.
President Bush called the decision "a positive first step."
"The IAEA today issued a report that expressed serious concerns about Iranian decisions and that's a positive first step," he told reporters at his Crawford, Texas ranch.
"The world is coalescing around the notion that the Iranians should not have the means and the wherewithal to be able to develop a nuclear weapon," he said, according to Reuters.
The president said the U.S. strategy was to work with the EU 3 -- Britain, France and Germany -- to present a common voice about Iran's nuclear weapons ambitions.
Tehran was quick to reject the IAEA's move.
"We do not accept this resolution and will not execute it. There are serious legal problems with this resolution and ... we are not obligated to implement it," Mohammad Saeedi, deputy head of Iran's Atomic Energy Organization, told state television, according to Reuters.
The IAEA had begun meeting Tuesday but took a break for the EU to negotiate the resolution with board members. It reconvened Thursday when the resolution was adopted.
The proposal asks IAEA chief Mohamed ElBaradei to provide a comprehensive report on the implementation of Iran's Non-Proliferation Treaty Safeguards Agreement and the resolution itself by Sept. 3.
Despite EU and U.S. pressure, Iran resumed activities at its Isfahan uranium conversion plant on Monday. On Wednesday, Iranian officials broke the IAEA seals on its conversion equipment and returned to full operation.
Iran says its nuclear activities are for civilian energy programs only. The country says it needs to develop nuclear power to meeting booming electrical needs and keep its oil and gas reserves for export.
Iran voluntarily stopped all atomic fuel production work in November 2004 after reaching a deal with the EU 3 to work toward a permanent solution. But on Sunday, the country rejected the EU's offer of political and economic incentives if it permanently abandoned enriched uranium fuel production.
Under the nuclear Non-Proliferation Treaty, Iran may process and enrich uranium for peaceful purposes. But the EU 3 has said the only way to prove its peaceful intentions is to renounce all technology that could be used to make nuclear weapons.
Uranium conversion is the first step in creating enriched uranium, which can be used to fuel nuclear power plants or, when enriched further, nuclear weapons.