The substance of the Iran nuclear deal is slowly disappearing and European powers will decide in the coming days whether to launch a dispute resolution process over Tehran's latest violations, according to the French foreign minister.

Iran said on Sunday that it would scrap limits on enriching uranium, taking a further step back from the 2015 agreement with six major powers.

Its decision followed the assassination of Iranian military commander Qassem Soleimani in a US drone attack, a move which heightened already heated tensions between Washington and Tehran after US President Donald Trump pulled out the nuclear deal last year and imposed punishing sanctions on the Islamic Republic.

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"The latest decisions mean that the Iranians can now enrich uranium without any constraints, with the quantities they want, in the areas they want, and with the number of centrifuges they want," French Foreign Minister Jean-Yves Le Drian told BFM TV on Monday.

"The repeated violations leave us today asking about the long-term validity of this [nuclear] accord. We are considering launching the dispute mechanism resolution ... we will make a decision in the coming days."

Launching a dispute resolution process could eventually lead to renewed UN sanctions on Tehran.

Le Drian, whose country has led efforts to defuse tensions between Iran and the United States, said both powers needed to return to the negotiating table, but warned Iran against carrying out responses that could escalate the situation.

"We aren't at war, but if we don't mobilise to reduce tensions then the risk of war is there," he said. "There is always room for diplomacy."

Asked whether the US strike that killed Soleimani was a political act by US President Donald Trump - who ordered the attack - to distract from domestic problems, Le Drian said the Iranian commander was not a "choir boy", was on the US and European Union terrorism lists and had been mandated by Iran's supreme leader to carry out destabilising acts in the Middle East.

The European Union's 28 foreign ministers are expected to hold an emergency meeting on Friday.

"We must be ready to react to Iran's breaches of the nuclear deal," a European diplomat told Reuters News Agency.

Asked whether this could mean triggering a mechanism that could result in international sanctions being reimposed on Tehran, the envoy said: "It is increasingly likely, but not yet decided. Friday will be key."

Two other diplomats said France, the UK and Germany could make the decision before Friday.

Asked whether the mechanism would be triggered, one of the diplomats said: "Not later than Friday, but, yes."