His comments followed a report that Washington was holding talks with its European allies on a possible deal to grant Tehran access to imported nuclear fuel and other incentives in return for a suspension of uranium enrichment activities.

"It is time that they took a step and presented proposals that respect our legitimate right to use civilian nuclear technology and that provide the necessary assurances that that we will not seek to build an atomic bomb," Kharazi said, quoted by the student news agency ISNA.

But he cautioned that it was "wrong to think that (the Europeans) can, through negotiations, oblige Iran to give up its right to uranium enrichment".

The International Atomic Energy Agency (IAEA), based in Vienna, has told Iran to suspend its fuel cycle work related to uranium enrichment pending the completion of a probe of the Islamic republic's nuclear activities.

Depending on the level of purification, enriched uranium can be used either as fuel for a civilian reactor or as the explosive core of a nuclear bomb.

The European Union's so-called Big Three -- Britain, France and Germany -- would like Iran to give up its work on the nuclear fuel cycle altogether as part of a "Libya-style" deal that rewards compliance with a host of incentives.

Iran says it only wants to generate electricity, and emphasizes that enrichment is permitted under the nuclear Non-Proliferation Treaty (NPT) -- the treaty overseen by the IAEA -- if for peaceful purposes.

The European Union on Monday reiterated its willingness to renew dialogue with Iran but only on the condition if it suspends uranium enrichment activities, as the IAEA demanded on September 18.

Tension is rising ahead of a November meeting of the IAEA directors, when Washington is expected to raise the stakes by calling for the Iran nuclear issue to be sent to the UN Security Council.

But the New York Times, citing unnamed European and US diplomats, said that while the US administration had not endorsed any incentives for Iran, it was not discouraging Britain, France and Germany from assembling a package that a new administration could consider after November 2 presidential election.

"There is indeed the idea from the G8 to make a last try on Iran," ahead of a November 25 meeting of the IAEA at which a deadline falls for Iran to suspend enrichment and answer all questions about its nuclear ambitions, a diplomat in Vienna close to the IAEA told AFP.

The G8, made up of the world's top industrialized nations, comprises Britain, Canada, France, Germany, Italy, Japan, Russia and the United States.

Meanwhile, Kharazi said an agreement for Moscow to supply Iran with enriched uranium for its Bushehr nuclear power plant being built by Russia was likely to be finalised during a visit by Russian President Vladimir Putin.

"The delay in signing the contract is due to technical problems but the accord will be finalised with the visit by the Russian president, which we are preparing," he said, quoted by the state news agency IRNA.

The deal has been held up for several months amid a dispute over pricing and the return of spent fuel.

Meanwhile, a team of IAEA inspectors has arrived in Iran for fresh talks aimed at resolving a series of outstanding questions.

State television said the delegation was headed by the agency's deputy director general Pierre Goldschmidt who would again be raising the issues of traces of highly enriched uranium found here as well as Iran's work on advanced P2 centrifuges.

Goldschmidt was also quoted as saying he hoped to carry out site visits, as well as discuss a possible visit to the Parchin military zone near Tehran that has been cited as a possible site of covert nuclear activities.

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