VIENNA—Iran and Western nations failed to reach a final nuclear deal by Monday's deadline and have now agreed to extend talks into December and potentially further, according to Western officials and the Iranian state media.

Negotiations over the past few days have been tense, with both sides acknowledging a lack of progress in what was supposed to be the final round of negotiations this week over Iran's contested nuclear program.

The parties now claim that last-minute progress in the talks warrant an extension into December—and likely thorough July 2015—though the sides have yet to decide upon a location for continued negotiations, according to a Western source cited by the Associated Press.

The impasse between the parties, which has been described by Secretary of State John Kerry as "serious," appears to center on the eventual size of Iran's nuclear enrichment program. Tehran is angling to retain large portions of its program, while the West seeks to limit the number of nuclear centrifuges Iran can operate.

The talks will be extended until July 2015.

Under the extension, it is believed Iran will receive $700 million a month over the term of the talks.

Iranian diplomats speaking to the country's state-controlled media also confirmed that an extension is likely to be announced, though it could be as short as a "few days," according to the Fars News Agency.

"Some progress has been made. But we need to discuss some issues with our capitals. We will meet again before the new year. This is an ongoing process," an Iranian diplomat involved in the talks told Fars.

Iran stepped up its anti-American rhetoric heading into Monday, with a senior military commander saying that the United States cannot be trusted.

"Most of the Muslim world's problems are the result of the arrogant and expansionist performance of the hegemonic powers, headed by the U.S., and the tragedies that Islamic countries have faced, are so much that we cannot have even an iota of trust in the Americans," Iranian Brigadier General Massoud Jazayeri, deputy chief of staff of the Iranian Armed Forces, said on Monday, according to Fars.

"It is obvious that from now on, we will not have even an iota of trust in the promises of the hegemonic powers," Jazayeri said.

Negotiations continued behind closed doors on Monday afternoon, with neither side announcing a formal agreement to extend talks. Some speculated that this announcement could come later in the afternoon.

Though it was unclear as of Monday morning if Western negotiators had offered any concessions to Iran in a bid to keep the country engaged in talks, outside experts have raised concerns that the United States is caving on its key demands.

The West is said to have proposed providing Iran with a certain amount of sanctions relief upfront, as well as a 10-year sunset clause, meaning that the deal would effectively expire in a decade.

The United States and its partners also have conceded to Iran the right to enrich domestically, a concession that has drawn much outrage on Capitol Hill among lawmakers who have fought to prevent this.

Iran also will not be required to dismantle key portions of its program, according to those familiar with the talks, another concession that could enable Iran to resume its most controversial nuclear research.

The West additionally has caved on the issue of research and development, meaning that Iran can continue work on advanced nuclear centrifuges capable of more quickly enriching uranium, according to sources familiar with the talks.

Iran also has refused to even discuss several key issues, including its ballistic missiles program and the Arak heavy water reactor, which provides Iran with an alternate plutonium-fuelled path to a bomb.