Iran and world powers agreed on Wednesday to hold new talks in March and April over the Islamic republic’s disputed nuclear drive after negotiations concluded with Tehran hailing a "more realistic" approach to the decade-old dispute.

There was no sign of a major breakthrough over Iran's nuclear ambitions in the Kazakh city of Almaty but the agreement on new meetings suggested there was still potential for progress.The talks saw the five UN Security Council members and Germany offer Iran a softening of non-oil or financial sector-related sanctions in exchange for concessions from Tehran over its sensitive uranium enrichment operations.

A senior US official said Iran "appeared to listen carefully to the offer" and its chief negotiator Saeed Jalili issued rare praise for the world powers' "positive" and "realistic" attitude.

"Some of the points raised in their (the world powers') response were more realistic, compared to what they said in the past, Jalili told reporters after the talks. "We consider these talks as a positive step which could be completed by taking a positive and constructive approach and taking reciprocal steps," he said. But he added: "We still have a long distance to cover to reach the optimal point."

Uranium enrichment is the most sensitive part of the nuclear cycle as the process can be used to make both nuclear fuel and the explosive core of a nuclear bomb that the powers fear Iran wants to develop. Officials said the sides would next meet at the level of senior civil servants on March 17-18 in Istanbul.Talks involving Jalili and the six world powers represented by EU foreign policy chief Catherine Ashton would then take place in Almaty on April 5-6.

Ashton gave a hugely cautious assessment of the talks in which she refused to be drawn into a judgement of their success. "I hope that the Iranian side are looking positively on the proposals we put forward," Ashton told reporters. "The proposals we put forward are designed to build in confidence and enable us to move forward.

Meanwhile, satellite images show that Iran's Arak heavy-water plan is operational, raising fears that it is trying to produce plutonium for a nuclear bomb, Britain's Daily Telegraph claimed on Tuesday. The newspaper published images on its website which appear to show steam rising from forced air coolers, suggesting heavy-water production at the plant, which has been closed to international inspectors for 18 months.

Heavy water is required in plutonium-producing reactors and that raises alarms that Tehran is seeking a second path to obtain the bomb.In the meantime, US lawmakers are introducing a bill on Wednesday that expands economic penalties against Iran and is designed to force countries like China to buy less Iranian crude oil, according to a copy of the legislation obtained by Reuters on Tuesday.

The legislation by House Foreign Affairs Committee Chairman Republican Ed Royce of California and the panel's top Democrat Eliot Engel of New York builds on existing US sanctions that have so far led to the devaluation of Iran's currency and slashed the country's main source of funding - oil revenues.Meanwhile, Israeli Prime Minister Benjamin Netanyahu urged the international community on Wednesday to threaten Iran with "military sanctions", saying economic measures are failing to curb Tehran's nuclear drive.

"I believe it is incumbent upon the international community to intensify the sanctions and clarify that if Iran continues its programme, there will be military sanctions," Netanyahu said.He did not, in a statement released by the prime minister's office, specify what military measures he envisages.