"We could help you (Iran) with the best and most sophisticated technology," Javier Solana said after EU foreign ministers met to discuss the package on Monday.

Ursula Plassnik, the Austrian foreign minister whose country holds the rotating EU presidency, said: "We are prepared to work on a co-operation package and support Iran's development of a proliferation-proof civilian nuclear programme."

The EU plans to offer Tehran enhanced incentives to halt sensitive nuclear activities which the West suspects are aimed at producing a bomb, coupled with a UN resolution threatening possible sanctions if it refuses.

Plassnik said the EU plan would contain three elements - economic assistance, political co-operation and backing for a civilian nuclear power programme.

Without giving details, Solana said the European offer - which it hopes to present to Iran at the end of the month - would go beyond the comprehensive package of technological, economic and political sweeteners rejected by Tehran last August.

Diplomats said at the time that the original package included allowing Western companies to build nuclear power stations in Iran and supply fuel to them.

Conditions

The 25-member bloc said in a joint statement that as a prerequisite for any incentive, Iran would have to agree to "suspend all enrichment related and reprocessing activity, including research and development".

But the latest initiative seemed likely to be rejected by Iran.

Mahmoud Ahmadinejad, the Iranian president, pre-emptively ruled out any such trade-off on Sunday and his foreign minister repeated the message on Monday.

Mottaki: Demand for suspension
of enrichment illogical

Manouchehr Mottaki told the ambassadors of Britain, France and Germany in Tehran that "any demand for a suspension or pause [of uranium enrichment] is an illogical and unacceptable demand and undoubtedly will be rejected."

The United States has agreed in principle to the EU presenting a new package offer to Iran, provided it accompanies a UN resolution paving the way for possible sanctions if Tehran does not suspend uranium enrichment activities.

Efforts to agree on a UN resolution last week stalled in the UN Security Council amid opposition from Russia and China.

The EU statement acknowledged Iran's right to use nuclear energy for peaceful purposes but affirmed that it fully supported a UN resolution that would make legally binding international calls for it to suspend nuclear enrichment.

Ahmadinejad said Iran would not accept any EU offer if it included a demand that Tehran stop what he called peaceful nuclear activities.

Action calls

Frank-Walter Steinmeier, the German foreign minister, said: "I am optimistic that there are still enough sensible people to respond positively to the offer and not in the same way as Ahmadinejad."
 

"I am optimistic that there are still enough sensible people to respond positively to the offer and not in the same way as Ahmadinejad"

Frank-Walter Steinmeier, 
German foreign minister

Speaking after meeting South Korean officials in Seoul on Monday, Kofi Annan, the UN secretary-general, called for urgent action on the Iranian nuclear dispute crisis but said he was encouraged by diplomatic efforts to resolve the standoff.

The US made clear on Sunday it had no intention of holding direct talks with Iran on the nuclear issue despite a letter from Ahmadinejad to George Bush, the US president, last week.

Germany, which has in past weeks called on Washington to engage Iran directly, acknowledged there was little chance of Washington doing that.

"The United States have said it is out of the question," Steinmeier said.