The Group of Eight leading powers on Friday deplored post-election violence in Iran but refrained from questioning President Mahmoud Ahmedinejad's re-election victory.
G8 foreign ministers were divided over how to respond to the Iran crisis, with Italy and France seeking condemnation of the regime's crackdown while Russia warned against isolating Tehran.
"We want violence to stop immediately," Italian Foreign Minister Franco Frattini told a news conference after releasing the declaration from the G8: Britain, Canada, France, Germany, Italy, Japan, Russia and the United States.
"We are concerned about the aftermath of the Iranian presidential election," the foreign ministers said in their statement.
"We fully respect the sovereignty of Iran. At the same time we deplore post-election violence which led to the loss of lives of Iranian civilians and urge Iran to respect fundamental human rights," they said.
"The crisis should be settled soon through democratic dialogue and peaceful means," the ministers said on their second day of talks in the northeastern Italian city of Trieste.
The G8 urged the Iranian government to "guarantee that the will of the Iranian people is reflected in the electoral process" but did not call for a re-count or cast doubt on the outcome.
The statement came after Iran's electoral watchdog closed an investigation into fraud on Friday, saying no "major irregularities" were found and declaring the elections were the "cleanest we have had".
But the election commission did set up a special panel to report on the disputed poll and conduct a partial re-count.
Ahmadinejad won a second term in the June 12 polls but the opposition has charged that the vote was rigged and several Western governments have questioned the legitimacy of the result.
French Foreign Minister Bernard Kouchner acknowledged that the final declaration was a compromise between a tougher European Union position and Russia's more conciliatory stance.
"It's obvious that we were not in agreement on the situation in Iran," said Kouchner. "We are united on the nuclear issue and that's positive."
Divergences appeared when Russian Foreign Minister Sergei Lavrov warned that isolating Iran was the "wrong approach" and could derail efforts to win cooperation from Tehran on its nuclear programme.
Moscow considers the election turmoil an Iranian internal matter.
The West has expressed alarm over Tehran's crackdown on mass street protests, arrests of opposition members and restrictions placed on journalists. State media has reported 17 deaths from the violence.
British Foreign Secretary David Miliband said: "There is unity here that it is up to the Iranian people to choose their government and it is for the Iranian government to protect their people."
The Iran crisis overshadowed the G8 talks in Trieste that were initially set to focus on Afghanistan and the Middle East peace process.
Both the G8 and the diplomatic quartet seeking to advance Middle East peace called on Israel to halt Jewish settlements in the Palestinian territories as a key step toward a renewed peace drive.
"This will be the first beginning to make sure all our proposals are implemented," said U.N. Secretary-General Ban Ki-moon. The quartet comprises the European Union, Russia, the United States and the United Nations.
The foreign ministers' meeting, which ends on Saturday, is laying the groundwork for the G8 summit in two weeks in L'Aquila, the Italian city devastated by an earthquake in April.