Iran and world powers have agreed to a four-month extension of the deadline for a permanent deal on Tehran’s controversial nuclear programme, during negotiations taking place in Vienna.

US diplomats agreed to release $2.8bn in Iranian funds frozen overseas in exchange for Tehran continuing to convert its current uranium stocks into fuel.

Talks with the P5+1 countries – China, France, Russia, the UK, the US and Germany – are expected to be restarted in September, ahead of a final deadline on 24 November.

The world powers suspect the Islamic Republic is developing an atomic weapons programme, but the Gulf country insists its nuclear developments are for power generation and medical purposes.

“We have made tangible progress on some of the issues, [but] there are still significant gaps on some core issues, which will require more time and effort.” Iran’s Foreign Minister Mohammad Javad Zarif and EU foreign policy chief Catherine Ashton said in a joint statement on 19 July.

“We will reconvene in the coming weeks in different formats with the clear determination to reach an agreement on a Joint Comprehensive Plan of Action (long-term agreement) at the earliest possible moment,” they added.

Iran is expected to receive the $2.8bn in six tranches over the next four months, with the first due to go through in August, according to the country’s foreign ministry.

The Islamic Republic has received $4.2bn of frozen assets since the Geneva interim agreement was signed in November 2013.

The main sticking point on a permanent deal is the exact limits to which Iran would have to roll back its nuclear programme and the length of time these constraints would be enforced.

“I can try and work out an agreement where we would maintain our current levels [of nuclear enrichment centrifuges],” Zarif said in an interview with the New York Times during the Vienna negotiations.

However, Kerry has dismissed the idea that Tehran could maintain the present number of centrifuges as part of a long-term deal, saying “we have made it crystal clear that the 19,000 [centrifuges] that are currently part of their programme are too many”.

The Islamic Republic is looking to reach a deal in its nuclear programme in exchange for relief from US-backed sanctions against energy and trade, which have had a crippling impact on the country’s economy.