The UK, France and Germany are to retain sanctions on Iran in an attempt to deter Tehran from selling drones and missiles to Russia.
In 2015 Iran agreed to a nuclear deal and, under the terms, some sanctions were due be lifted next month.
However, the European nations believe Iran breached the deal by enriching and storing uranium.
Iran says their move is "illegal and provocative" and "clearly violated" the terms of the nuclear deal.
European diplomatic sources said the decision was driven not just by a desire to prevent Iran gaining economically, but also to try to reduce the possibility of Tehran transferring ballistic missiles to Russia.
Tehran has already sold many drones to Moscow which have been used against Ukraine.
The UK, France and Germany said the sanctions were designed "to maintain nuclear proliferation-related measures on Iran, as well as arms and missile embargoes".
The European powers – known collectively as E3 – announced that they would incorporate expiring UN sanctions into their own laws.
Despite the sanctions, many drones made in Iran have been used by Russia in its war against Ukraine.
Separately, the UK has announced sanctions against officials responsible for drafting and implementing Iran's mandatory hijab legislation, including the culture minister and mayor of Iran's capital Tehran.
The move comes ahead of the first anniversary of the death of Mahsa Amini. Her killing after being arrested by morality police for allegedly breaking hijab rules kicked off a wave of protests.
Iran agreed to the nuclear deal, known as the Joint Comprehensive Plan of Action (JCPOA), with a group of world powers known as the P5+1 – the US, UK, France, China, Russia and Germany – eight years ago.
Under the 2015 accord, Iran agreed to limit its sensitive nuclear activities and allow in international inspectors in return for the lifting of crippling economic sanctions. The accord bars anyone from buying, selling or transferring drones and missiles to and from Iran.
The agreement envisaged a "transition day" eight years later, when remaining ballistic missile and nuclear-related sanctions on Iran would be lifted.
The sanctions also included an asset freeze on a list of people and organisations believed to be helping advance the nuclear programme.
Countries such as Russia and China will no longer be bound by the restrictions if they do not adopt sanctions similar to those of the UK, France and Germany before 18 October.
The E3 said the sanctions would remain in place until Tehran was "fully compliant" with the deal.
Iran said the decision "clearly" violated the E3's obligations under the JCPOA and UN Security Council Resolution 2231, which calls upon Iran not to undertake any activity related to ballistic missiles designed to be capable of delivering nuclear weapons.
The E3 said the decision was compliant with the JCPOA, as Iran had "refused opportunities to return to the JCPOA twice" and had "continued to expand its programme beyond JCPOA limitations and without any credible civilian justification".
Donald Trump unilaterally withdrew the US from the JCPOA in 2018.
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