The UN Security Council will order sanctions against North Korea's space agency in a resolution to be passed this week condemning the secretive state's ballistic launch, a diplomat said.
The resolution, which also targets other government entities and individuals linked to North Korea's nuclear weapons program, could be passed by the 15-member council as early as Wednesday.
The United States and China have been negotiating the new measures since North Korea staged its missile launch on December 12.
Despite near universal condemnation of the launch, China has sought to shield its ally against major new action. The United States, supported by South Korea and Japan, had sought tough new punishment of the North Korean government.
Under a compromise between the two, the new sanctions designations are expected to be added to existing measures imposed after North Korea staged nuclear weapons tests in 2006 and 2009.
"The resolution condemns the launch and reiterates the Security Council's previous demands that North Korea abandon its nuclear weapons program and not proceed with further launches," the diplomatic source said, speaking on condition of anonymity because the measure has not yet been made public.
It "imposes new sanctions on North Korean companies, and government agencies, including North Korea's space agency responsible for the launch, and several individuals," the source added on Monday.
North Korea denied accusations by the United Nations and the international powers that the rocket was a ballistic test. Pyongyang said it was launching an observation satellite.
The proposed resolution updates lists of nuclear and ballistic missile technology banned for transfer to and from North Korea.
It includes "new provisions targeting North Korea's illicit procurement efforts, in particular its smuggling of sensitive items that could contribute to the prohibited programs," the diplomat said, declining to provide further details.
Washington hopes for a quick vote on the draft resolution.
"The United States circulated the draft text today after getting agreement from China. The vote could be held Wednesday," a council diplomat told AFP.
Russia, which could be the other obstacle to sanctions, has also approved the resolution, said the diplomat.
"The resolution will be a signal that China is becoming increasingly exasperated at North Korea's behavior," said another western diplomat.
The UN already has 11 banks, trading companies and other entities on an assets freeze list that has grown since the nuclear tests. The last three were added in May last year, one month after North Korea staged a failed rocket test.
The Security Council agreed on a presidential statement, with lower standing than a binding resolution, after the failed rocket launch in April.
The sanctions list also includes five individuals -- three nuclear officials and two directors of trading companies that have procured technology.
North Korea is barred from importing nuclear and ballistic-missile technology as well as luxury goods such as Mercedes cars and champagne.
Sanctions experts say the ban on luxury trade is widely flouted.
The United States and China want a resolution passed before South Korea takes over the presidency of the Security Council in February, envoys said.
US and Chinese diplomats made no immediate comment on the new resolution.