"We would be willing to consider any package that recognises the full right of Iran to enjoy peaceful nuclear technology within the framework of the Treaty on the Non-Proliferation of Nuclear Weapons (NPT)," Husain Musavian, a senior national security official involved in the nuclear negotiations, said in an interview.

"But Iran is not prepared for cessation. Any package including a cessation of fuel cycle work would be rejected by Iran," he added.

The Islamic Republic was reacting to a European offer of a deal to persuade it to end its suspected arms-related nuclear programmes.

The offer came after a meeting of the G8 industrial powers in Washington where Britain, France and Germany presented a package of "carrots and sticks".

The package is intended to press Iran to halt uranium enrichment and other activities that could enable it to build a bomb. 

Washington has accused Iran of secretly developing nuclear arms. US officials predict Iran could have a nuclear weapon in three to five years, and the issue is among the priorities facing whomever is elected America's president on 2 November.  

Iran says its nuclear programme is for peaceful energy purposes only.The Bush administration opposes deal-making with states it has dubbed "axis of evil" countries such as Iran, North Korea and pre-war Iraq. 

Sanctions

But it acquiesced over the initiative on the expectation that if Iran rejects it, G8 states will be united in having the 25 November meeting of the International Atomic Energy Agency (IAEA) refer the issue to the UN Security Council, where sanctions could be imposed. 

"The EU three indicated they will be presenting their idea to Iran next week," state department spokesman Tom Casey said, referring to Britain, France and Germany. 

Some US officials continue to have serious reservations about going along with the Europeans. 

Others said they still were not sure if Russia, a key player in Iran's nuclear ambitions, was on board. Moscow may be waiting for results of the EU talks with Iran and the next IAEA report on Iran's programme. 

Non-compliance claim

"Is it worth another effort to tell the Iranians they ought to comply now with IAEA obligations? Sure, but we don't think the Iranians are going to do it. I'm afraid the Iranians show every sign of persisting in their non-compliance," a senior US official said. 

The Bush administration opposes
deal with 'axis of evil' states

The European offer includes a commitment to resume stalled
talks on an EU-Iran trade agreement, and guarantee Iran access to Russian nuclear fuel, diplomats said. 

Although the Security Council can impose sanctions, US officials say they would start with lesser penalties. 

The US is growing frustrated that the IAEA has failed to refer the issue to the security council, something Iran has lobbied vigorously to prevent.

Iran's rejection

Reacting to the announcement, Iran said it will reject any European proposal for a complete cessation of its work on the nuclear fuel cycle, but is willing to consider further "confidence-building" measures, and extending a suspension of uranium enrichment.

Musavian (C) has said Iran is not
prepared for cessation

Musavian said Iran expected the IAEA to recognise its right under the NPT to possess the full nuclear fuel cycle.

If this were the case, he said the Islamic republic was ready to consider extending its suspension of uranium enrichment and discuss new initiatives that would provide long-term guarantees that the process would never be diverted to military purposes.

"Iran is definitely open to confidence-building measures, full
cooperation with the IAEA, full transparency and all
confidence-building measures that are required to assure the world that all enrichment activities would always remain peaceful and never be for military purposes," Musavian said.

Differences 

The EU three said they had not expected outright US support for the initiative.

"There have never been identical points of view and there was no expectation any government would change its point of view," said a European official who attended the meeting.

"I'm afraid the Iranians show every sign of persisting in their non-compliance"

Senior US official

EU officials acknowledge that Europe alone cannot offer Iran big enough incentives to abandon its suspected arms-related activities, without the prospect of the United States ending its isolation of Tehran.

Democratic White House candidate Senator John Kerry is interested in a deal, and some US officials are thinking about
how to move in that direction if a new president asks for
advice.

But Bush hawks advocate isolating and punishing Iran, and
some influential US neoconservatives argue for "regime
change" in Tehran.