* Iran, six powers to meet again on March 17
* Agreement on agenda marks step forward
* But sides remain far apart on how to resolve dispute
* Negotiations expected to last for months
* IAEA: Iran's most sensitive nuclear stockpile falling (Adds IAEA report, paragraphs 19-21)
By Justyna Pawlak and Fredrik Dahl
VIENNA, Feb 20 (Reuters) - Six world powers and Iran made a "good start" in talks in Vienna towards reaching a final settlement in the decade-old stand-off over Tehran's nuclear programme, but conceded their plan to get a deal in the coming months was very ambitious.
By late July, Western governments hope to hammer out an accord that would lay to rest their suspicions that Iran is seeking the capability to make a nuclear bomb, an aim it denies, while Tehran wants a lifting of economic sanctions.
Wide differences remain on how this could be achieved, although the two sides said on Thursday they agreed during meetings this week in the Austrian capital on what to discuss and a preliminary timetable for the talks on such an accord.
"We have had three very productive days during which we have identified all of the issues we need to address in reaching a comprehensive and final agreement," European Union foreign policy chief Catherine Ashton told reporters.
"There is a lot to do. It won't be easy but we have made a good start," said Ashton, who speaks on behalf of the United States, Russia, China, France, Britain and Germany.
Senior diplomats from the six nations, as well as Ashton and Iran's Foreign Minister Mohammad Javad Zarif, will meet again on March 17, also in Vienna, and have a series of further discussions ahead of the July deadline.
Tehran denies that its nuclear programme has any latent military purposes and has signalled repeatedly it would resist dismantling its nuclear installations as part of any deal.
"I can assure you that no one had, and will have, the opportunity to impose anything on Iran during the talks," Zarif told reporters.
A senior U.S. official who asked not to identified cautioned that the exchanges with Iran would be "difficult" but the sides were committed to reaching a deal soon.
"This will be a complicated, difficult and lengthy process. We will take the time required to do it right," the official said. "We will continue to work in a deliberate and concentrated manner to see if we can get that job done."
As part of the diplomatic process, Ashton will go to Tehran on March 9-10.
A diplomatic source clarified that the two sides did not produce a text of an agreed framework for future negotiations or detailed agenda for upcoming meetings, rather only agreeing a broad range of subjects to be addressed in coming months.
While modest in scope, the arrangement is an early step forward in the elusive search for a settlement that could ward off the danger of a wider war in the Middle East, reshape the regional power balance and open up big new trade opportunities with Iran, an oil-producing market of 76 million people.
For Iran, a halt to sanctions imposed by the United States, European governments and the United Nations, would end years of isolation and lift its battered economy.
VAST DIFFERENCES
The six powers' overarching goal is to extend the time Iran would need to make enough fissile material and assemble equipment for a nuclear bomb, and to make such a move easier to detect before it became a fait accompli.
They will want to cap uranium enrichment at a low fissile concentration, limit research and development of new nuclear equipment, decommission a substantial portion of Iran's centrifuges used to refine uranium and allow more intrusive U.N. non-proliferation inspections.
The Vienna talks followed a ground-breaking interim accord between Iran and the six powers in November under which Tehran suspended higher-level enrichment until late July in return for limited relief from sanctions.
That deal was made possible by the election of relative moderate President Hassan Rouhani, replacing bellicose hardliner Mahmoud Ahmadinejad, last year on a platform of rebuilding the OPEC member state's foreign relations.
The U.N. nuclear watchdog, which has a critical role in monitoring the agreement's implementation, issued an update on Thursday showing Iran was living up to its commitments.
Its report said Iran's most sensitive nuclear stockpile - uranium refined to a fissile concentration of 20 percent, a relatively short technical step away from potential weapons-grade material - had declined significantly for the first time in four years and was now well below the amount needed for one bomb, if processed to a high degree.
Since halting this enrichment under last year's deal, Iran has diluted some of the material to lower-level uranium and converted some into a less proliferation-sensitive oxide form.
But many difficult hurdles remain to be settled.
Iran's unfinished heavy water Arak reactor, which could yield plutonium for bombs, and its underground Fordow uranium enrichment site will be among key sticking points in the talks.
"We have begun to see some areas of agreement as well as areas in which we will have to work though very difficult issues," the senior U.S. official said.
The official declined to respond specifically to Iran's suggestions that its ballistic missile programme, which the West worries could be a way to deliver an atomic bomb to its target, would not be up for negotiation.
"All of the issues of concern to the international community regarding Iran's nuclear programme are on the table," the official said. "And all of our concerns must be met in order to get a comprehensive agreement ... Nothing is agreed until everything is agreed."
Iranian ballistic missile work is banned under U.N. Security Council sanctions targeting the nuclear programme.
Zarif said, according to the official IRNA news agency: "Nothing except Iran's nuclear activities will be discussed in the talks with the (six powers), and we have agreed on it".
A U.S. delegation will be visiting Israel and Saudi Arabia shortly to discuss the negotiations with Iran, the U.S. official. Both countries are upset about signs of a possible Western rapprochement with their common adversary. (Additional reporting by Parisa Hafezi and Louis Charbonneau; Editing by Mark Heinrich)
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