"The understanding is, we go to the Security Council if they reject the offer. And I hope they don't. I hope they realize the world is clear about making sure that they don't end up with a nuclear weapon," he said.

Bush said Tehran, which denies Washington's charges that the Islamic republic seeks atomic weapons, must "permanently abandon any enrichment or reprocessing to make sure that Iran does not develop a nuclear weapon."

Britain, France and Germany led efforts to offer Iran economic incentives to do so "and now we're waiting for an Iranian response," the US president said during a press conference.

His comments came as Iran's President Mohammad Khatami asserted that no incentives would be enough to convince the Islamic republic to renounce its nuclear program, but pledged the country would make "every effort" to convince the world it was not seeking atomic weapons.

Bush also said that "Iran should adopt democracy" but pointedly declined to say he thought there should be regime change in Tehran -- the kind of language used in the run up to the war in neighboring Iraq.

Asked whether he believed there should be regime change in Iran, Bush replied: "I believe that the Iranian people ought to be allowed to freely discuss opinions, read a free press, have free votes, be able to choose among political parties.

"I believe Iran should adopt democracy, that's what I believe," said the president.