WASHINGTON (AFP) - Western leaders hailed their hard-won nuclear agreement with Iran on Sunday but were quickly confronted by the scale of the six-month struggle ahead to reach a final settlement.

For, while the United States and its allies welcomed an accord that they hope will put Iran's nuclear enrichment program on hold as talks continue, it marks only the first stage in fraught negotiations.

Even as US President Barack Obama hailed a breakthrough in ties with a traditional foe, he had to move quickly to placate skeptical US friends: Israel and the Gulf monarchies.

And Iran's new leader President Hassan Rouhani seized upon the supposedly tough deal to do a victory lap of his own, declaring - despite Western denials - that Teheran had won a "right" to future enrichment.

The White House was at pains to insist it had only given ground on a tiny fraction of the economic sanctions previously imposed on Iran to halt what the West sees as its bid to build a nuclear bomb.

And officials stressed that such relief would only last while Iran keeps its side of the bargain and the world powers seek a "lasting, peaceful and comprehensive solution."

But Israel's Prime Minister Benjamin Netanyahu, whose own country is widely assumed to have an undeclared nuclear arsenal, branded the Geneva agreement a "historic mistake" that would convince Teheran it has a free hand to achieve breakout nuclear capability and tip the balance of power in the Middle East.

Obama, who also faces skepticism from many lawmakers in his own capital, called Netanyahu in a bid to reassure him that the accord was temporary and the sanctions relief limited.

"The two leaders reaffirmed their shared goal of preventing Iran from obtaining a nuclear weapon," deputy White House spokesman Josh Earnest said.

The deal was reached in marathon talks in Geneva that ended before dawn after long tractions between Iran and the five permanent members of the UN Security Council plus Germany.

But the six powers hailed it as a key first step that wards off the threat of military escalation - a geopolitical breakthrough that would have been unthinkable only months ago.

UN Secretary-General Ban Ki-moon said the deal "could turn out to be the beginnings of a historic agreement" for the Middle East.

And Teheran boasted at home that the accord recognised its "right" to enrich uranium - which it says is for peaceful purposes - since it only limits the levels of purity that can be achieved and does not ban the process outright.

Iran will neutralise its stockpile of uranium enriched to higher 20 per cent purity - close to weapons-grade - within six months, US Secretary of State John Kerry said in Geneva after clinching the deal.

Iran will not add to its stockpile of low-enriched uranium, nor install more centrifuges nor commission the Arak heavy-water reactor, which could produce plutonium fissile material.

UN atomic inspectors will also have additional, "unprecedented" access, Kerry said, including daily site inspections at the two enrichment facilities of Fordo and Natanz.

In exchange, the Islamic republic will receive some US$7 billion (S$ billion ) in sanctions relief and the powers promised to impose no new embargo measures for six months if Teheran sticks to the accord.

The vast raft of international sanctions that have badly hobbled the Iranian economy remain untouched.

The interim relief was "limited, temporary, targeted, and reversible," the White House said.

Rouhani, whose election as Iran's president in June raised hopes of a thaw with the West, insisted that "Iran's right to uranium enrichment on its soil was accepted in this nuclear deal by world powers."

But Kerry was adamant: "This first step does not say that Iran has the right of enrichment, no matter what interpretative comments are made." And British Foreign Secretary William Hague told the BBC that only a final, comprehensive accord - if reached - would grant Iran a "right" to peaceful nuclear energy.

Russia said it was a win-win deal but President Vladimir Putin also echoed Obama's note of caution: tougher battles surely lie ahead.

"A breakthrough step has been made, but only the first on a long and difficult path," Putin said.

The next six months will see Iran and the United States, China, Russia, France, Britain and Germany negotiating the more comprehensive deal.

Iranians, many of whom see the nuclear program as a source of national pride, are impatient to see a lifting of sanctions that have more than halved Iran's vital oil exports since mid-2012.

"The structure of the sanctions against Iran has begun to crack," Rouhani claimed.

For ordinary Iranians, news of the breakthrough was a moment of joy and fresh hope that lives made miserable by sanctions would improve.

Their weakened currency, the rial, strengthened after the deal, and a sense of relief flowed through Iranian streets and online social networks.

"I am not opposed to the enrichment right. But I am entitled to other rights as well: the right to have a job, to see the development of my country," wrote one Iranian Internet user, Saghar.