Iran has said it is willing to enter talks about the offer but has repeatedly rejected demands to halt uranium enrichment, which can have both civilian and military uses.

Military confrontation 

The long-running dispute over Iran's nuclear programme has sparked fears of a military confrontation.
   
"The Islamic Republic of Iran's response to Solana and the foreign ministers was submitted to Solana by Iran's ambassador to Brussels," the source told IRNA, adding that it was signed by Manouchehr Mottaki, the foreign minister.
   
State radio earlier said Saeed Jalili, Iran's chief nuclear negotiator, told Solana by telephone that Iran would respond to a letter from the six powers later on Friday.

The two men agreed to hold more talks later this month, it reported.
    
The letter Jalili referred to formed part of the incentives package presented by Solana. His comments did not make clear how detailed Iran's response would be.
   
The incentives package says formal negotiations on the offer can start as soon as Iran suspends uranium enrichment.
   
It is a revised version of an offer spurned by Iran in 2006, which included civilian nuclear co-operation as well as wider trade in aircraft, energy, high technology and agriculture.

Alireza Ronaghi, Al Jazeera's correspondent in Tehran, said the timing couldn't have been better.

He said the US administration policy in the region has been kind of stranded, adding: "The US's condescending tone has changed totally -- they are not asking Iran to stop its nuclear activities totally.

"Second, Iran has crossed the line between laboratory scale and industrial scale of uranium enrichment. The Iranian president has said that Iran is now an industrial scale nuclear country, so they know that if there is susspension it won't harm Iran's plans for a ncuelar ambitions.

"Third, Iran's economy has been hurt really badly recently because of the three rounds of santions by the UN Security Councial."

'Constructive outlook'

Jalili said Iran, which has earlier presented its own package of proposals aimed at resolving the row, had prepared its response by concentrating on common ground between the two sides and with a constructive and creative outlook.
   

Iran insists that its nuclear programme is solely for energy production [EPA]
Analysts and diplomats say they detect a softer tone from Iran towards the nuclear incentives offer, but that this may be a bid to buy time rather than a shift to accept world powers' key demand of a halt to uranium enrichment.
   
Enriched uranium can be used as fuel for power plants but also, if refined much more, provide material for nuclear bombs.
   
Iran, the world's fourth-largest oil exporter, says its nuclear programme is solely aimed at generating electricity so that it can sell more of its oil and gas.
   
An Iranian official, speaking on condition of anonymity to Reuters news agency last month, said time was on Iran's side.
   
"We will review the package but not the part about enrichment freeze ... We are moving forward with our work and Iran's nuclear capability is being constantly augmented," said the official, who was involved in talks with Solana in Tehran.