The European Union is ready to lift damaging economic sanctions against Iran as soon as the UN confirms Tehran has met the terms of a historic nuclear deal, diplomatic sources said Friday.

The International Atomic Energy Agency (IAEA) is expected to announce shortly, possibly later Friday or over the weekend, that Iran cannot now acquire nuclear weapons, as it agreed with world powers in July in return for ending sanctions.

The diplomatic sources told AFP that everything was being put in place so that the 28-nation EU, alongside the United States and the United Nations, can end its sanctions regime on what is known as "Implementation Day" for the July agreement.

"When the report from the IAEA is published, the European Union will be ready," one of the sources said.

The source said member states were agreeing the precise instruction which would then be finalised by the Netherlands as holder of the six-month rotating EU presidency.

In a key step, Iran said on Thursday it had removed the core of its Arak heavy water reactor and filled in part of it with cement, meaning it could not be used to produce a nuclear weapon.

Iran has always insisted its nuclear programme was purely for peaceful purposes.

The EU chaired the talks between Iran and the United States, Russia, China, Britain, France and Germany.

EU, US and UN sanctions have proved damaging for Iran, blocking billions of dollars in assets overseas and starving the oil-dependent economy of much-needed technology and investment.