"We are open to dialogue with Iran and we want to find a solution through dialogue but at the same time ... our patience is not going to last forever," Guido Westerwelle told a joint news conference with International Atomic Energy Agency chief Mohamed ElBaradei.

"Frankly, a nuclear-armed Iran is not acceptable," Westerwelle said.

The West fears Iran's nuclear programme is aimed at atomic bomb-making capability. Iran denies this.

When asked what he meant by limited patience, Westerwelle said sanctions could be imposed.

Westerwelle also confirmed that six powers has drawn up an IAEA draft resolution urging Iran to clarify the purpose of its previously secret uranium enrichment site and confirm it has no more hidden atomic work.

Backed by the United States, Germany, France, Britain, Russia and China, the draft is to be presented at the meeting of agency's 35-nation governing board that starts on Thursday.

Russian and Chinese support is significant since they have often blocked a tough, united stance against Iran. If it passes, it will be the IAEA's first resolution on Iran in nearly four years.

The resolution could meet resistance from a developing nation bloc which includes Iran and makes up nearly half the board. But Westerwelle said he was confident.

We are hoping for broad support at the board of governors meeting," he said.

A senior developing nation diplomat said the resolution could pass. "I think (it) has a majority, but it could backfire. Iran is already cooperating within their limited legal parameters. So this measure might just boost the hardliners in Tehran."

In an interview with Reuters, ElBaradei said mistrust had grown since Iran revealed a previously covert nuclear site.

He also said Iran's insistence on changing a nuclear fuel deal could not be accepted by Western powers because it would not reduce its enriched uranium stockpile.

But ElBaradei said the powers should wait for Iran to take a viable stance on the fuel plan because it posed no imminent nuclear threat.