Donald Trump told Emmanuel Macron, the French President, that he plans to withdraw from the Iran nuclear agreement, the New York Times reported.

The US is preparing to reinstate all the sanctions lifted under the deal, the newspaper reported, citing a source briefed on the conversation, writes telegraph.co.uk.

Mr Trump also intends to slap on additional economic penalties, it reported.

However a French official denied the New York Times report, claiming the US president did not inform Mr Macron of his final decision.

The two leaders spoke over the phone on Tuesday afternoon ahead of the US president's announcement from the White House.

The move goes much further than many predicted - and throws the entire agreement into uncertainty.

However a French official denied the New York Times report, claiming the US president did not inform Mr Macron of his final decision.

The two leaders spoke over the phone on Tuesday afternoon ahead of the US president's announcement from the White House.

Senior British diplomats have also said the UK government is "deeply pessimistic" about Mr Trump's announcement over the Iran nuclear deal this evening.

Mr Macron lobbied the US President to stay in the accord during his State Visit - the first of Mr Trump's administration - but appeared unable to convince him.

The two leaders discussed "issues related to peace and stability in the Middle East" during their phone call on Tuesday, Mr Macron's office said.

Other European officials have also rushed to Washington over the last few weeks in a bid to convince Mr Trump to stay in the agreement. Angela Merkel, the German Chancellor, and Britain's Foreign Secretary Boris Johnson have both travelled to the US capital hoping to persuade the US government.

The British government has said it will continue to honour the deal, despite believing Mr Trump will renege on the deal.

A senior British diplomat said: "The Foreign Secretary went to Washington this week to make the pitch for the US to remain in the Iran deal. Following that visit, unfortunately we are deeply pessimistic ahead of President Trump’s announcement later today. However, we will have to wait and see what exactly President Trump says tonight.

"Our objective will remain to uphold and maintain the JCPOA.  We will need to wait to understand what the US plan is to deliver on our shared goal of preventing Iran from obtaining a nuclear weapon and addressing their regional behaviour."

France and Germany have said they will stick with the deal even if the US pulls out. Florence Parly, France's defence minister, called the deal "a factor of peace and stabilisation in a very eruptive region".

World leaders and diplomats are scrambling to avoid "uncontrolled escalation" in the Middle East in anticipation of Mr Trump's withdrawal from the agreement.

The US president may stop short of a complete withdrawal but looks set to reimpose sanctions on Iran's central bank and its oil sector dealings, a key pillar of the agreement.

What will happen?

Mr Trump's decision to scrap sanctions relief would have global ramifications, straining Iran's already crisis-racked economy, heightening tensions in the Middle East and laying bare the biggest transatlantic rift since the Iraq War.

The Iranian rial had lost around a third of its value in six months, before authorities in April took the drastic step of pegging the exchange rate to the dollar.

Mr Trump could also decide to stop waivers for a thicket of other sanctions against Iran, effectively ending US participation in the deal and putting European companies at risk of sanction.

Iran's President Hassan Rouhani - who very publicly advocated engaging with America and would be politically exposed should the deal fail - said his country would stay in the agreement even if the United States pulls out.

In a nod to Europe, Mr Rouhani said he would keep "working with the world" for "constructive engagement". 

It is unclear whether Iran's more hardline military leaders, or Supreme Leader Ali Khamenei, hold the same view.

And with tensions building between Iran and Israel, Tehran's response could well come away from diplomatic antechambers or the meeting rooms of multilateral fora.