US President Donald Trump says American and Iran could sign a peace deal as soon ‌as this weekend that would reopen shipping traffic through the Strait of Hormuz.

The agreement, if finalised, would be the most significant diplomatic breakthrough yet ‌to end the three-month war.

However, American media has counted 30 times in recent weeks that Trump has claimed a deal to end the war was imminent.

“We just made a great settlement of the war with Iran,” he said on Friday morning (AEST).

“The Strait will officially open as soon as we sign, which ‌could be soon, very soon, ‌maybe over the ⁠weekend in Europe.”

Vice President JD Vance could sign for the US, ​Trump said.

The Fars news agency reported that Iran was likely to approve the agreement although it had yet to give a formal response.

But Reuters said Iran had not yet made a ​final decision and would not compromise on ​its “red lines”, according to its IRNA news agency, quoting Foreign Ministry spokesperson Esmaeil ​Baghaei.

When ‌asked at the ​White House ‌whether Iran’s Supreme Leader Mojtaba Khamenei had approved the ​deal, Trump said: “I understand the answer is yes”.

Trump described ​the ​deal ​as “a very strong memorandum ‌of understanding,” adding it was “a little conceptual but it’s something that’s going to get ​done”.

It came after Trump pulled the plug on US military strikes on Iran at the last minute, claiming a diplomatic breakthrough in negotiations.

After vowing to hit Iran “very hard”, Trump said peace talks had advanced to the ‌highest levels of Iran’s leadership and were approved by all countries involved. He added that the “time and place of the signing” would be announced “shortly”.

The dramatic reversal came hours before further strikes were expected.

But the details — including how Iran’s leadership had signalled its approval — were not immediately clear in Trump’s post on Truth Social.

“Based on the fact that discussions with the Islamic Republic of Iran have been ‌brought to ‌the ⁠highest level of Iranian leadership and ​approved, I have, as President of the United States of America, cancelled the scheduled strikes and bombings against Iran this ⁠evening,” Trump ‌wrote.

“Discussions and final points ‌have been, in both ‌concept and great detail, approved ⁠by all parties involved, including the United States, Israel, Saudi Arabia, UAE, Qatar, Turkey, Pakistan, Bahrain, Kuwait, Jordan, ​Egypt, and others.

“The Naval Blockade will remain in full force and effect until this Transaction is finalised — Time and place of the signing to be announced shortly,” he added.

There was no immediate comment from Iran.

Trump’s post marked a sharp about-turn from a previous post where he said the US could take Kharg Island, Iran’s main oil export terminal.

The latest apparent breakthrough after stalled efforts to end the war came as clashes took the shaky two-month truce to the brink.

Iran’s foreign ministry said the US attacks had “effectively rendered the ceasefire … meaningless” but notably stopped short of saying it was abandoning it.

Central to the negotiations has been Iran’s stranglehold on the Strait of Hormuz, which has disrupted oil and gas supplies and driven up fuel and food prices.

-with AAP/PA