Under the deal, which would cap an 800-million-dollar contract to build and bring the Bushehr plant on line, Russia will fuel the reactor on condition that Iran sends back spent fuel, which could potentially be upgraded to weapons use.

Iranian media said Russia's top atomic energy official Alexander Rumyantsev and his Iranian counterpart Gholamreza Aghazadeh inked the deal during a tour of the Russian-built power plant at Bushehr in southern Iran.

Washington is convinced that Iran is seeking to build atomic weapons -- charges that Tehran denies -- and has been trying to convince Moscow to halt its nuclear cooperation.

The condition that spent fuel be returned was built into the deal as a concession to Western concerns. Tehran initially rejected the condition, but eventually relented after two years of negotiations.

The dispute over spent fuel had pushed the plant's opening back to January 2006. The deal faced a further snag Saturday when Iran objected to a Russian proposal to further delay firing up the plant's reactor.

Russia's ITAR-TASS news agency quoted Rumyantsev as saying the plant is scheduled to go online at the end of 2006, with 100 tonnes of fuel to be delivered about six months before.

Aghazadeh told state television that Bushehr was likely to be fully equipped within 10 months, with tests taking place by mid-2006.

Russian diplomats say the United States has been lobbying against Moscow's involvement in Iran's nuclear programme "on a daily basis" -- but Russia has stuck by the lucrative contract and an option to build a second reactor at Bushehr along with plants at other locations.

They say the huge contract has helped save Russia's atomic energy industry, and emphasise there is no way that Bushehr -- also under International Atomic Energy Agency (IAEA) scrutiny -- could constitute part of a weapons programme.

In Washington's tough line on Iran, some in Russia see an unstated aim to thwart Russia's commercial and strategic interests.

The United States argues Iran -- lumped into an "axis of evil" -- has no need for nuclear energy because of its massive oil and gas reserves and wants to see Tehran hauled before the UN Security Council for possible sanctions.

Tehran counters that it needs to free up fossil fuels for export and meet increased energy demands from a burgeoning population.

Iran also intends to produce its own nuclear fuel for future plants -- hoped to produce 7,000 megawatts of electricity by 2020 -- a drive at the centre of the current stand-off with the international community.

While Bushehr symbolises Iran's nuclear ambitions, of greater Western concern is its work on the nuclear fuel cycle elsewhere in the country.

Britain, France and Germany have been trying to persuade Tehran to permanently stop enriching uranium -- which can be directed to both civil and military uses -- in return for a package of incentives.

Enrichment for peaceful purposes is permitted under the nuclear Non-Proliferation Treaty (NPT), and Iran insists it only wants to enrich uranium to levels required for civil purposes.

The clerical regime also argues it does not want to be dependent on foreign fuel -- a position likely to be reinforced by the difficulties encountered in negotiating Russian supplies.

"Enrichment is not negotiable," nuclear negotiator and top cleric Hassan Rowhani told state media on his return to Tehran from a visit to Paris and Berlin.

A two-year probe by the IAEA, the UN body that monitors the NPT, has uncovered suspect activity by Iran, but no conclusive "smoking gun" to prove it has military plans for its programme.

According to a report in The Washington Post, associates of disgraced Pakistani scientist Abdul Qadeer Khan offered to sell Iran the makings of a nuclear weapons programme after a secret meeting in Dubai 18 years ago.

The report said while Iranian officials told the IAEA that Tehran turned down more sensitive equipment, evidence suggests that Iran went on to buy much of the equipment and technology outlined in the offer from other sellers at cheaper prices.

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