The US State Department said it would "review" Iran's response to a package of incentives to encourage it to suspend enrichment added that it "falls short of the conditions set by the Security Council".

The statement reminded Tehran that the UN security council requires full and verifiable suspension of all uranium-enrichment activity.

The US president had a 14-minute phone call with Kofi Annan, the UN secretary-general, to discuss the statement and terms of the Security Council resolution, a White House spokeswoman said.

Iran handed over its formal response to the offer on Tuesday to saying it contained ideas that would allow serious talks about its nuclear ambitions to start immediately.

Sanctions threatened

The administration has previously warned Iran that it would seek sanctions at the UN if it did not stop enriching uranium by August 31.

Iran's response appears to have been aimed at encouraging the European countries, China and Russia to negotiate without accepting a suspension of uranium.

"If the Europeans pay proper attention to positive and clear signals included in Iran's response, the case will be solved through negotiation and without tension," Hamid Reza Asefi, the foreign ministry spokesman, was quoted by state-controlled radio as saying.

Asefi described Iran's response as a sign of his country's goodwill to resolve the standoff.

Philippe Douste-Blazy, the French foreign minister, responded by saying that "the door is still open" for negotiations but only if Iran suspends uranium enrichment first.

Martin Jaeger, the German foreign ministry spokesman, said the demand to halt enrichment was due to the fact "that Iran clearly has lost the confidence of the international community that its nuclear programme is civilian".

Negotiated solution

Russia and China - both veto-wielding members of the security council - have appeared receptive to the request for talks.

Russia's foreign ministry said it would continue to seek a negotiated solution, and China appealed for dialogue, urging "constructive measures" by Iran and patience from the US and its allies.

Mikhail Kamynin, Russian foreign ministry spokesman, said talk of sanctions before the August 31 deadline was "premature".

Last month, a senior Iranian MP said parliament was preparing to debate withdrawal from the Nuclear Non-proliferation Treaty if the Security Council adopts a resolution to force Tehran to suspend enrichment.