(Refiles to insert dropped word in headline)

By Louis Charbonneau

UNITED NATIONS, July 29 (Reuters) - Britain, which backed a failed effort to impose U.N. sanctions on Zimbabwe, said on Tuesday the Security Council might have to review its position on Zimbabwe if there is no progress in resolving the crisis there.

British Deputy U.N. Ambassador Karen Pierce said the Security Council had received a "sober" report on the situation in Zimbabwe, along with an update on power-sharing talks in South Africa between Zimbabwe's opposition and negotiators for President Robert Mugabe, which broke off on Monday.

The opposition Movement for Democratic Change said the talks had deadlocked, apparently over Mugabe's insistence that he remain president.

An MDC official said the opposition was unwilling to accept a deal that included only the post of vice president for its leader, Morgan Tsvangirai.

"We wish those efforts well but it's clear that if we don't make progress soon or don't see progress soon in Zimbabwe, that the council will have to come back to this issue," Pierce told reporters after the briefing by U.N. special envoy to Zimbabwe, Haile Menkerios.

"He gave a sober assessment of the transition process, of the negotiations, of the moods in each of the parties," Pierce said.

South African President Thabo Mbeki, who is mediating in the negotiations, said in Pretoria that the talks were "doing very well" and denied that they were deadlocked.

"Mr Menkerios did not use the word 'deadlock' in his briefing. He did say the negotiations were difficult," said Pierce.

The U.N. envoy also made clear to the Security Council that the humanitarian and economic crisis in Zimbabwe was worsening, she added.

Tsvangirai won a first round presidential vote on March 29 but pulled out of the June 27 second round citing systematic violence, which the MDC says has killed 120 of its supporters.

Russia and China this month vetoed a U.S.-drafted resolution, supported by Britain, that would have imposed an arms embargo on Zimbabwe and financial and travel restrictions on Mugabe and other officials of his government. (Editing by Chris Wilson)

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