U.S. Secretary of State Hillary Clinton told a Washington think-tank on Wednesday that the world faced the nightmare scenario of nuclear-armed terrorists.

Highlighting the spread of nuclear materials and weapons know-how, Clinton said: "Unless these trends are reversed - and reversed soon - we will find ourselves in a world with a steadily growing number of nuclear-armed states and an increasing likelihood of terrorists getting their hands on nuclear weapons."

"The international community failed to prevent North Korea from developing nuclear weapons," she also told the U.S. Institute of Peace think tank.

She stressed that North Korea''s leaders should "be under no illusion that the United States will ever have normal, sanctions-free relations with a nuclear-armed North Korea."

Clinton also urged Iran to put into practice an emerging plan aimed at dispelling doubts about the true nature of its nuclear program, which Tehran insists is aimed at providing peaceful energy.

Her comments came on the same day as talks between Iran and three world powers on Tehran''s nuclear program ended in Vienna. A draft deal has been submitted to the sides for approval by Friday.