"With our new proposals to the Europeans we will have a breakthrough, and with these positive results we will reach our goal," Iran's top negotiator, Ali Larijani, was quoted as saying by Iranian news agencies on Saturday.

"Dr Ahmadinejad has new innovations, and the details will be announced soon," he added, signalling that the initiative could be partly designed to widen international involvement in the talks - currently being led by Britain, France and Germany.

"Some people inside Iran believed that Iran's negotiating partners should not be limited to three European countries, although they can remain a part of the issue," Larijani said.

China and Russia

In comments likely to anger the EU3 - which have been negotiating with Iran for nearly two years - Larijani said he did "not agree that the European countries are acting on the behalf of all nations".

Larijani said negotiations should
not be limited to three countries

He said countries from the Non-Aligned Movement, China and Russia - seen as being more sympathetic to Iran's effort to possess nuclear fuel facilities - "cannot be excluded" from the diplomacy.

"There will be definite changes regarding the negotiating methods and the political conditions currently governing the negotiations," said Larijani, who was speaking after meeting in Vienna with UN atomic watchdog chief Mohamed ElBaradei.

Iran is unhappy with the EU3 after they demanded a total halt to fuel cycle work in exchange for a package of trade, security and technology incentives.

Iran maintains that such work for peaceful purposes is a right of any signatory of the nuclear Non-Proliferation Treaty.

Conversion activities

In protest over the demand, Iran resumed uranium conversion activities, the first step in making enriched uranium, which is fuel for power reactors but can also be the raw material for atom bombs.

The resumption of this work, which Iran had suspended in November to start talks with the EU, has scuttled the negotiations and could lead to Iran being brought before the United Nations Security Council for possible sanctions.

The IAEA will issue a new report
on Iran's nuclear activities

France also said on Friday that the EU3 had been working in conjunction with their 22 other EU partners as well as the full 35-nation board of governors of the International Atomic Energy Agency (IAEA), which had called on Iran to return to a freeze of sensitive activities.

The US State Department on Thursday also dismissed Iran's challenge to the EU.

"This is a typical tactic for the Iranian government. They will come up with proposals like this to try to change the subject from what the real issue is, and that is their continued pursuit of nuclear weapons," State Department spokesman Sean McCormack said.

"We would encourage them to resume their discussions with the EU3 and, in doing so, take the deal that's on the table," he added.

IAEA report

Iran has denied pursuing nuclear weapons, arguing it needs atomic energy in order meet growing domestic energy demands and to free up more of its vast oil and gas reserves for export.

The IAEA is due to issue a new report on Iran on 3 September, and Iran has been emboldened by agency conclusions that highly enriched uranium particles found in Iran were from imported equipment and not from Iran's own activities.

But the report will also cover suspicious on Iranian work with plutonium, another atom bomb material.

But Larijani shrugged off any fear of being referred to the UN Security Council.

"Others should not think that this taboo they have created, the Security Council, is something that will frighten our great nation. If they consider our case to be security issue, many will lose," he warned.