EU member states are set to announce a new package of sanctions against Iran over its nuclear programme.
Ahead of a meeting of foreign ministers in Luxembourg, diplomats said the measures would focus on dealings with Iran's banks, trade and gas imports.
UK Foreign Secretary William Hague said they would be "a sign of our resolve... that will step up the pressure".
Western powers suspect Iran's nuclear programme is a cover for developing weapons, something Iran has denied.
Analysts say the unilateral sanctions announced by the US and EU, as well as those imposed by the UN Security Council, have done significant damage to the Islamic Republic's economy.
Earlier this month, riots broke out when Iran's currency, the rial, plunged to new lows against the dollar, according to local currency exchange websites, having lost 80% of its value since the start of the year.
'Room for negotiations'Diplomats have said the new sanctions will include a ban on financial transactions between European and Iranian banks, with some exceptions for those involving humanitarian aid, food and medicine purchases.
Amir Paivar Business reporter, BBC Persian
Oil is the bloodline of Iran's export revenues. Less than three months ago the European Union implemented an oil embargo to slow down the "blood circulation" in the Iranian economy. The financial sanctions on the table now, if finalised, target the "nerve system".
An EU-wide severing of financial ties with Iran's banking system would in practice hamper the Islamic republic's transactions in euros, limiting them to debt payment and purchase of food and medicine. Similar sanctions by the US Treasury have already locked Iran out of transactions in US dollars. Now losing the world's second-most important hard currency for settling oil payments would further isolate Iran from the global financial system and also paralyse its trade.
A recent fall in the value of Iran's rial and the protests that followed the currency crisis may have this time led the EU to hit where it hurts most.
European traders will be required to apply to governments for authorisation before they can finance transactions in permitted goods.
There will also be a new ban on short-term export credit trade guarantees. Medium- and long-term guarantees are already banned.
Firms will also not be allowed to sell Iran aluminium and graphite, which could be used in its nuclear and ballistic missile programmes.
The EU will also ban imports of natural gas from Iran, mirroring the more significant ban on oil imports which came into effect in July.
Mr Hague said pressure would continue to mount on Tehran over the coming months unless negotiations with the so-called P5+1 - the UK, US, France, China, Russia and Germany - were successful.
The EU's foreign policy chief, Catherine Ashton, told reporters before Monday's meeting that there was still "room for negotiations".
The P5+1 have asked Iran to stop enriching uranium to 20%.
The Iranian government says it requires 20% enriched uranium for its medical research reactor in Tehran, but Western experts say it could be converted to weapons-grade material within six months.
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