The effort comes amid indications that US-only financial sanctions are having a bigger economic impact than expected.

In Brussels this week Robert Kimmitt, deputy US Treasury secretary, tried to persuade the European Union to follow a US decision this month to impose sanctions on Bank Sepah, a state-owned Iranian bank, which it said had a role in financing acquisitions for Iran's missile programme.

This followed less severe US action in September against Bank Saderat, which was accused of facilitating the operations of the militant Hizbollah movement, which Washington classifies as a terrorist group.

By cutting the banks out of any interaction with the US financial system, Washington's actions made dealing in dollars much more difficult for them. Similar action from European authorities would tighten the squeeze.

Last month the United Nations Security Council passed a resolution against Iran which includes a ban on financing for 10 named companies alleged to be linked to its missile and nuclear programmes.

The US argues that sanctions against Bank Sepah are required by the resolution because of its alleged link to Iran's weapons programmes - and European governments should therefore follow suit. The administration has presented evidence it says backs its case. Mr Kimmitt said EU governments had to meet their UN obligations.

But the EU is reluctant to take such a step, with officials saying it is legally difficult to impose sanctions on institutions or individuals that are not explicitly named by a UN resolution.

Such concerns have previously led the UN to come out with long lists of proscribed financial institutions to avoid a legal vacuum for cases such as terrorist financing. A Swedish official said: "We need to be certain that whatever measures there are in terms of financial sanctions stand up in a court of law."

There are costs for the Iranians even if the sanctions are not extended. Reports from Iran suggest the financing of fairly straightforward transactions, even with non-US banks, has become more difficult. Mr Kimmitt said there was "some reason to believe that those entities in Iran engaged in licit activities are beginning to express displeasure in being swept up in the kinds of actions aimed at those engaged in [illegal] activities".

Some European banks, including HSBC and ABN Amro, have curbed dealings with Iran. Commerzbank of Germany, which has lead managed international bonds for Iran, has said it will stop handling dollar transactions for Tehran.

Ted Truman of the Peterson Institute for International Economics in Washington, said: "The effect of the sanctions is to raise transaction costs for the Iranians." Officials say extending the sanctions, for example, to include euros and sterling would make them far more effective. Iran is already seeking payment for oil sales in euros. Gholam-Hossein Nozari, managing director of the National Iranian Oil Company, has said about 57 per cent of Iran's income on 2.4m barrels/day exports is now in euros.

What evidence there is suggests Iran has started to build the proportion of its overseas assets held in euros.

Unofficial estimates suggest Iranian deposits held in euros rose by 50 per cent in the year to September 2006 to $15bn. Although the total deposits in all currencies rose from $25bn at the end of September 2005 to more than $30bn, the amount held in dollars was almost unchanged at about $13bn.

Analysts said the impact of US sanctions against the Macao-based Banco Delta Asia in 2005 over North Korea appeared to have influenced tactics against Iran. Jeffrey Schott of the IIE said: "In many cases, financial sanctions have proved to be more successful than trade sanctions."