Iran will continue to enrich uranium at one of its nuclear sites, but will cease operations at a second, under the terms of a preliminary agreement with the EU and the US.
After lengthy talks, Iran agreed solutions on key parameters of a future comprehensive agreement on its nuclear programme, which is set to be agreed by June 30.
Iranian foreign minister Mohammad Javad Zarif said they were "still some time away" from reaching their desired point, and said Iran would continue enriching uranium at its Natanz site, but not at Fordow.
Leaders also agreed to reduce the current stockpile of around 10,000kg of low-enriched uranium to 300kg for 15 years.
All UN security council resolutions would be included in the comprehensive deal, he added.
An agreement has been reached on a framework for a deal on Iran's nuclear programme, the country's president Hassan Rouhani has said.
French Foreign Secretary Laurent Fabius returned for more Iran nuclear talks after flying back to Paris the previous day because progress had been too slow.
He said: "We are a few meters from the finishing line, but it's always the last metres that are the most difficult. We will try and cross them. "It's not done yet. We want a robust and verifiable agreement and there are still points where there needs to be progress especially on the Iranian side," he said.
One diplomat close to the talks said late on Wednesday that a deal could be announced within hours but had not yet been reached, and the talks could still fall apart.
World leaders and Iran stretched marathon talks on Tehran's nuclear program into a second day past their deadline, with diplomats saying prospects for a preliminary agreement were finely balanced between success and collapse in the coming hours, according to Reuters.
US Secretary of State John Kerry and German Foreign Minister Frank-Walter Steinmeier said they would stay at least until Thursday in an effort to seal the "political" agreement, a milestone toward a final pact due by the end of June.
The foreign minister of France said that Iran still had to make more effort to reach a preliminary political accord, but Tehran and the six powers were in the final and most difficult stages.
We are a few metres from the finishing line, but it's always the last metres that are the most difficult. We will try and cross them.
It's not done yet. We want a robust and verifiable agreement and there are still points where there needs to be progress especially on the Iranian side.
Foreign Secretary Philip Hammond has said progress has been made between Iran and major powers over Tehran's nuclear programme, despite passing Tuesday's midnight deadline, but said "key issues" still need to be resolved.
"I think we have a broad framework of understanding, but there are still some key issues that have to be worked through," Mr Hammond told the BBC.
"Some of them are quite detailed and technical so there is still quite a lot of work to do but we are on it now and we'll keep going at it."
The so-called P5+1 - the US, UK, France, China, Russia plus Germany - hope to limit Iran's nuclear ambitions in exchange for relief from sanctions which have left its economy crippled.
US President Barack Obama has been updated on nuclear negotiations between Iran and world powers as talks continued past the deadline.
The US State Department said enough progress had been made to warrant an extension, although there still were "several difficult issues" to overcome.
The president was pictured holding a video call with members of his national security team to discuss the talks, although no further details were released.
Representatives from the US, UK, France, China, Russia plus Germany - known as the P5+1 - have been locked in talks with Iran in Lausanne, Switzerland for days over the country's nuclear programme.
They aim to stop Iran from developing a nuclear bomb in exchange for relief from sanctions, which have left its economy crippled.
A deadline for a deal on Iran's nuclear development came and went at talks in Switzerland but there is still hope.Read the full story ›
The clock is ticking on Iran's nuclear development talks at a meeting with six world powers including Britain in Switzerland.Read the full story ›