"We have suspended work in Isfahan (at a uranium conversion facility) for two months until the EU puts forward its new practical proposals. Of course, it will not be extended," Khatami said on Sunday.

The EU-3 -- Britain, France and Germany -- have been holding talks to encourage Iran to provide long-term guarantees that its nuclear programme is purely civil in return for various trade and political incentives.

While the talks are ongoing, Iran has agreed to suspend uranium enrichment, a process in the manufacture of fuel for nuclear power stations but which can be also used to make atomic weapons.

Khatami, whose term in office ends early next month, said however that the conversion work at Isfahan "has nothing to do with uranium enrichment," and that the ball was now in the European court.

"We have made it clear that suspension of uranium enrichment will not be forever. We have displayed our good faith. Now, it is the turn of the European friends to do in line with the commitments they have made about the matter."

The Europeans fear that Iran could take a harder line on its nuclear policy when Khatami's successor, the ultra-conservative Mahmood Ahmadinejad, takes office on August 3.

But Khatami said: "We will never overlook our legal and national right for possessing nuclear technology and fuel cycle to generate electricity. Iran will never change its national policy in this respect."

Iran insists that its nuclear programme is purely peaceful despite US claims it is seeking atomic weapons, and says it has the right to enrich uranium under the nuclear Non-Proliferation Treaty.

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