World powers and Iran have agreed to extend talks on Tehran's nuclear program by four months, as the United States said it would unblock some $2.8 billion in frozen Iranian funds.
The deadline had been July 20 but speculation had been mounting that a delay would be agreed.
EU foreign policy chief Catherine Ashton and Iran's Foreign Minister Mohammad Javad Zarif said in a joint statement after talks in Vienna, "We have made tangible progress on some of the issues."
But she added, "there are still significant gaps on some core issues which will require more time and effort."
The P5+1 group of world powers -- the United States, Russia, China, France, Britain, and Germany -- wants Iran to substantially reduce its nuclear enrichment program to make sure it cannot produce nuclear bombs.
Iran, who says its nuclear activities have purely peaceful purposes, wants sanctions that have severely crippled its economy to be lifted as soon as possible.
The White House said in a separate statement that the extension was necessary because Washington "will not accept anything less than a comprehensive resolution that meets our objectives."
U.S. Secretary of State John Kerry said the United States would allow Iran access to $2.8 billion of its frozen assets in return for agreeing to convert some of its 20 percent enriched uranium stocks into fuel.
Kerry said that since an interim six-month agreement struck last November Iran had observed its side of the deal "to neutralize its stockpile of 20 percent enriched uranium; cap its stockpile of 5 percent enriched uranium" and not to install advanced centrifuges.
Kerry added, "It is clear to me that we have made tangible progress in our comprehensive negotiations, but there are very real gaps in some areas."
He cautioned that Washington "will continue to vigorously enforce the sanctions that remain in place."
Republican U.S. Representative Ed Royce, chairman of the House Foreign Affairs Committee, said in a statement that he did not see the extension as progress.
Royce said, "It looks like the Iranians won extra time with a good cop-bad cop routine."
French Foreign Minister Laurent Fabius said in a statement on July 19 that France hoped the new extension would convince Iran to make the "indispensable choices" needed to reach a long-term agreement.
German Foreign Minister Frank-Walter Steinmeier said the next six months "could be the last and best chance for a long time to end the nuclear dispute peacefully."
With reporting by Reuters, AP, AFP and the BBC