In his annual report to the U.N. General Assembly, Mohamed ElBaradei said Iran should suspend its uranium enrichment program "as a confidence building measure" and North Korea should dismantle its nuclear weapons program or at least allow inspections to ensure it is "exclusively peaceful."

ElBaradei, who heads the International Atomic Energy Agency, also stressed the importance of resuming U.N. nuclear inspections in Iraq "as soon as the security situation permits" to ensure that items with both civilian and military applications are not being misused.

He told the General Assembly that "the most disturbing lesson" from the revelation of clandestine nuclear programs in Iran and Libya was "the existence of an extensive illicit market for the supply of nuclear items."

"The relative ease with which a multinational illicit network could be set up and operated demonstrates clearly the inadequacy of the present export system," he said.

ElBaradei noted current controls on exports of nuclear materials aren't binding, don't include many countries with growing industrial activities, and don't require sharing information with his agency.

"It is very serious," he told reporters afterward. "We're talking about 25 to 30 companies involved with this in at least 20 to 30 countries - not with the knowledge of their governments - but it shows there are a lot of cracks in this export control regime, which we need to fix quite soon."

For now, the most pressing issue before the nuclear agency is what to do about Iran's moves to enrich uranium. The agency's board of governors will decide on the next steps when it meets Nov. 25 at its headquarters in Vienna, Austria, to consider a report ElBaradei is still writing.

Uranium enriched to a low level can be used to produce nuclear fuel for electricity-generating plants, but if enriched further can be used to make atomic weapons. Iran is not prohibited from enriching uranium under its obligations to the Nuclear Nonproliferation Treaty, but is barred from arms-related work.

Britain, Germany and France have warned most European countries would back the United States' call to refer Iran to the U.N. Security Council if the Iranian government does not abandon all enrichment activities by Nov. 25.

On Sunday, Iranian lawmakers shouting "Death to America" unanimously approved the outline of a bill that would force Iran's government to resume uranium enrichment.

But Iran's top nuclear negotiator, Hossein Mousavian, said a compromise was possible. He held out the prospect of Iran suspending building additional facilities to enrich uranium if European countries make good on offers to provide fuel for planned nuclear-powered electricity plants.

ElBaradei said Iran has legitimate needs for power generation, but added, "We need to strike a balance between the right of Iran to use nuclear technology and the concern of the international community that any nuclear program is a peaceful one."

As for North Korea, ElBaradei said he was a bit frustrated that six-nation talks involving the United States, China, Russia, Japan and the two Koreas were not moving faster in the effort to negotiate a deal for the communist regime to dismantle its nuclear weapons programs in exchange for economic help and security guarantees.