TEHRAN (AP): A report released by the U.N. nuclear watchdog Friday has vindicated Iran's nuclear program and left no justification for any U.N. Security Council sanctions, top government officials said Saturday.

A group of hard-line students also gathered in central Tehran to celebrate what they said was ``Iran's victory'' against U.S.-led allegations that Tehran's nuclear program was aimed at building nuclear weapons, distributing sweets to passers-by in the streets.

The 11-page report by the International Atomic Energy Agency chief Mohamed ElBaradei said all major past issues surrounding Iran's nuclear activities had been fully resolved or were ``no longer outstanding at this stage,'' repeatedly saying IAEA's findings are consistent with information available to the agency and explanations provided by Iran.

The U.S., however, said Friday that the report actually strengthens the case for additional sanctions because it said Iran failed to cooperate fully with U.N. investigators and left key questions about its nuclear past unanswered.

The IAEA report said Iran had dismissed as ``baseless'' information provided by Western intelligence agencies that Iran's alleged missile and explosives experiments are part of a nuclear weapons program and continued to enrich uranium in defiance of U.N. Security Council demands.

``With the release of Mr. ElBaradei's report, all legal basis (for action against Iran) has collapsed ... There is no legal basis for Iran nuclear dossier remaining at the U.N. Security Council and no justification for sanctions against Iran,'' state television quoted Vice President Parviz Davoudi as saying Saturday.

``Iran's nuclear issue has to return to the IAEA as soon as possible ... should the issue remain at the Security Council, it will only discredit the council,'' government spokesman Gholam Hossein Elham told a press conference Saturday.

Iranian newspapers also hailed the IAEA report Saturday as a ``big victory'' for Iran. ``Iran vindicated,'' said a front-page headline in the hard-line daily Hezbollah. ``Iran's victory in nuclear final,'' the daily Jam-e-Jam wrote.

The U.S.-led push for harsher sanctions against Iran became more difficult at the end of last year when American intelligence agencies issued a report saying Tehran had suspended its nuclear weapons program in 2003 and had not restarted it. However, U.S. officials have continued to insist Iran's nuclear activities are a threat because they could allow Tehran to restart weapons development in the future.

The IAEA report released Friday gave Iran a relatively clean bill of health on explaining the origin of traces of enriched uranium in a military facility; experiments with polonium, which can also be used in a weapons program, and purchases on the nuclear black market.

In such cases, ``the agency has been able to conclude that answers provided by Iran ... are (either) consistent with its findings (or) ... not inconsistent with its findings,'' said the report, in carefully worded language that would allow it to renew its probe into the issues.

But it said Tehran had rejected as irrelevant material forwarded by the agency that purportedly shows it working on tests of missile trajectories, high explosives testing, and research on a missile re-entry vehicle _ activities that would most likely be part of weapons development. Questions also remained on how and why Iran came to posses diagrams showing how to mold uranium metal into warhead shape.

The report also said that Iran had ``started the development of new-generation centrifuges'' _ an expansion of enrichment _ and continued working on heavy water nuclear facilities that when finished will allow it to cull them for plutonium, which, like weapons-grade uranium, is a possible fissile payload in nuclear warheads.

Those two findings alone empower the Security Council to slap additional sanctions on Tehran, say U.S officials.

The report will be the focus of discussions at an IAEA board report starting March 3. At that meeting, the U.S. and its allies are weighing whether to ask the board to approve a resolution declaring that the agency was unable to shed light on Iran's suspected nuclear weapons program, according to diplomats.