European negotiators and the United States were reportedly willing to accept the arrangement as a compromise to allow Iran to move ahead with its nuclear programme while ensuring it does not produce nuclear weapons. Enrichment can produce material either for a bomb or for nuclear reactor fuel.
Vice-President Gholamreza Aghazadeh, who heads the country's nuclear agency, said on Saturday that Iran was open to other proposals, pointing to an earlier Iranian idea that other countries participate in the enrichment process on Iranian soil as a guarantee that the programme is used only for peaceful purposes.
"What is important for us is that we be entrusted to carry out enrichment in Iran. As for participation by other countries in Iran's uranium enrichment programme, we will consider it if there is any proposal," he said.
But, when asked if Tehran would agree to carrying out enrichment abroad, Aghazadeh said, "Iran's nuclear fuel will be produced inside Iran."
Washington says Iran is aiming to produce nuclear warheads. Tehran denies that charge, saying its programme is intended solely to produce electricity while insisting it has the right to develop the entire nuclear fuel cycle on its own.
"What is important for us is that we be entrusted to carry out enrichment in Iran. As for participation by other countries in Iran's uranium enrichment programme, we will consider it if there is any proposal"
Aghazadeh spoke after talks with Russian envoy Igor Ivanov. Iranian and Russian officials refused to confirm whether Ivanov presented any compromise proposal to Tehran.
Iranian state -run television quoted Ivanov as saying that his visit reflected Russia's desire to help ease tensions between Iran and the Europeans over its controversial nuclear programme.
In Vienna on Friday, a diplomat accredited to the International Atomic Energy Agency confirmed that a position paper entitled, "Elements of a long-term solution" had been passed on to the Russians about a week ago.
Under the reported compromise, Iran would be allowed to do the conversion work, but the enrichment would be done in Russia - an arrangement that theoretically would deny Iran the capacity to make fuel for nuclear weapons.
Uranium in its natural state does not have a sufficiently high concentration of fissile isotopes for it to be used in nuclear reactors or weapons, and the concentration must be raised through the enrichment process.
The IAEA on 24 November plans to discuss whether to refer Iran to the UN Security Council for possible sanctions connected to its nuclear programme. An agreement before then could avert a vote and likely avoid straining relations between Russia and the United States, both of which have veto power on the Security Council.
IAEA may refer Iran to the UN
security council for sanctions
The matter has troubled Moscow-Washington relations for years. Iran's nuclear programme centres on the Russian-built Bushehr nuclear power plant, an $800mn project that is a significant source of income for Russia as well as an emblem of its technological sophistication.
Russia in the past has floated various ideas for overcoming Western concerns, including enrichment in Russia, and it has assured the West that Iran will send back to Russia all the reactor's spent fuel rods, which could be processed into plutonium for use in nuclear weapons.