The Islamic republic's national security chief Ali Larijani nevetheless said that talks with Moscow on the complex initiative -- which involves enriching Iranian uranium on Russian soil -- would continue.

"The Russian proposal is not sufficient for Iran's nuclear energy needs," Ali Larijani was quoted as saying by the official news agency IRNA.

"The Russian proposal has certain capabilities, but this capability is not sufficient for Iran's nuclear technology," he said on his arrival back from China, where he has been discussing the mounting crisis.

But Larijani, who heads Iran's Supreme National Security Council, did say that "one can not say that it is a negative proposal".

"We had a round of talks over it and we will do the next round," he said.

Larijani did not say when further talks would be held, although officials have already indicated that another meeting with the Russians is likely to take place in mid-February.

Moscow's idea to enrich uranium outside Iran is seen as a way out of a growing crisis over Iran's nuclear ambitions and has been backed as a possible solution by China, the United States and European Union.

Iran says it only wants to make nuclear fuel for nuclear power stations it has yet to build, although the ultra-sensitive process of enriching uranium can also be extended to making atomic weapons.

The West is determined to prevent this work from taking place inside Iran.

Iran first appeared cool to the Russian idea when it emerged several months ago, then implicitly rejected it and then embraced it as the beginnings of a possible compromise.

Russia, which has a lucrative one billion contract to build and fuel Iran's first nuclear power station, is eager to prevent the crisis from ending up in New York.

But some Western diplomats have accused Iranians of trying to buy time and avoid being referred to the UN Security Council.

The International Atomic Energy Agency's 35-nation board is to hold an emergency meeting on Iran on February 2 -- when such a referral could take place -- leaving just a small window for a new compromise.

Iran insists it has the right to conduct fuel cycle work as a signatory of the nuclear Non-Proliferation Treaty (NPT) and denies seeking weapons.

It has also been steadily backing away from a voluntary suspension of fuel cycle work agreed to by its former, more moderate, nuclear negotiators.

On January 10 Iran resumed enrichment research, prompting a new US and EU push for Iran's case to be sent the Security Council.

But Larijani warned that "any sort of haste and irrational behaviour would lead to unfavourable circumstances in the region."

Iran has threatened to resume industrial scale enrichment and limit IAEA inspections if its case is sent to the Security Council -- moves certain to escalate the crisis.

The EU has been negotiating with Iran for more than two years in the hope of persuading the country to voluntarily limit its nuclear activities. A previous offer of trade and other incentives has already been rejected by Tehran.

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