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The United States has granted a visa to Iranian President Mahmoud Ahmadinejad, allowing him to travel to New York to address the United Nations Security Council as it considers new sanctions against Tehran over its nuclear program.

"It has been approved," State Department spokesman Sean McCormack told reporters Monday.

The move, which had been expected, comes after world powers agreed in principle to a new package of sanctions and Iran sought to speak to the council before members vote on a resolution to impose the new measures for refusing to suspend uranium enrichment.

The United States does not have diplomatic relations with Iran, which it regards as a leading state sponsor of terrorism. The U.S. has repeatedly condemned the country for allegedly trying to disguise an atomic weapons program under the guise of a civilian nuclear energy scheme. Tehran denies the charge.

As host of the United Nations, the United States is obligated to allow foreign leaders to speak before the world body barring extraordinary circumstances.

"We have host country obligations and we are going to live up those host country obligations," McCormack said.

The date of Ahmadinejad's visit to New York has not yet been finalized, but McCormack said Washington hoped the Iranian leader would use the occasion to pull back from Iran's defiant refusal to negotiate over its nuclear program.

"It would be an important moment for President Ahmadinejad in his address to the Security Council to take the opportunity to say: 'We are going to negotiate, we do not seek confrontation, we seek dialogue.'"

U.S. Treasury official warns companies against doing business with IranCompanies need to be very careful about doing business with Iran, though the United States is not calling for all financial transactions with Iran to be cut off, a senior U.S. Treasury official said on Monday.

U.S. Deputy Treasury Secretary Robert Kimmitt said Tehran used front companies to cover for work that supports its nuclear programme, which the West fears is aimed at building atomic weapons. Tehran denies this is the case.

"I don't think anyone, even the United States, has called for all financial transactions to be cut off with Iran," Kimmitt told reporters in Berlin. "However, the problem is...that in Iran it's almost impossible to know your customer."

On Saturday, Russian Foreign Minister Sergei Lavrov said the United States needed to show more flexibility towards Iran to solve the crisis over the country's nuclear ambitions.

Kimmitt said banks needed to assess carefully the risk of doing business in Iran. "People need to be very, very careful about any business that they do with Iran," he said.

"Just know that almost any business there bears a high degree of risk precisely because you cannot be sure that the party with whom you are dealing is not connected to some form of illicit activity," he added.

Iranian President Mahmoud Ahmadinejad said on Friday his country would not yield to international pressure to abandon its nuclear fuel cycle despite a United Nations' agreement on new sanctions against Tehran.