President Barack Obama and Iranian President Hasan Rouhani will not meet while both leaders are at the United Nations, US officials say.
The officials say a meeting proved to be too complicated for the Iranians. But they say work is under way at the staff level to resolve an impasse over Iran's nuclear programme. US and Iranian leaders have not met in 36 years.
Mr Obama welcomed the new Iranian government's pursuit of a "more moderate course," saying it should offer the basis for a breakthrough on Iran's nuclear impasse. He signalled a willingness to directly engage Iran's leaders, tasking Secretary of State John Kerry with pursuing that diplomacy with Tehran.
"The roadblocks may prove to be too great, but I firmly believe the diplomatic path must be tested," Mr Obama said during an address to the UN General Assembly.
Mr Rouhani was not seen at today's lunch for world leaders hosted by UN Secretary-General Ban Ki-moon, and Iran's state-run English-language Press TV reported that Mr Rouhani skipped the lunch because alcohol was served.
Mr Obama's speech focused almost completely on the Middle East.
He also issued a stern message to the UN, saying its ability to handle current crises is being challenged by the dispute over what to do about Syria's chemical weapons. He called on the Security Council to pass a resolution that would enforce consequences on Syrian President Bashar Assad if he fails to follow a US-Russian deal to turn his chemical weapon stockpiles over to the international community.
"If we cannot agree even on this," he said, "then it will show that the United Nations is incapable of enforcing the most basic of international laws."
Mr Obama announced that the United States would provide 339 million dollars (£212m) in additional humanitarian aid to refugees and countries affected by the Syrian civil war.
The West has long suspected that Iran is pursuing nuclear weapons. Tehran has consistently denied the charge.