Iran's envoy to the UN atomic watchdog, Ali Asghar Soltanieh, also repeated that Tehran was ready to hold more negotiations over the supply of fuel for the internationally-supervised reactor located in the Iranian capital.

"The main issue is how to get a guarantee for the timely supply of fuel which Iran needs," Soltanieh was quoted as saying by ISNA news agency.

"We are ready to have negotiations with a positive approach, but because of lack of confidence with the West, we need to have those guarantees."

His comments come days after Iran rejected a deal brokered by the International Atomic Energy Agency (IAEA) which proposed Tehran sending most of its stock of low-enriched uranium (LEU) to Russia and France for converting into fuel for the research reactor.

Iran dismissed the deal but said it was ready for a simultaneous exchange inside borders of the Islamic republic of its LEU for nuclear fuel supplied by the West.

Western powers are strongly backing the IAEA-drafted deal as they fear Iran could enrich its LEU further to higher levels and use it in making atomic weapons, a charge vociferously denied by the Islamic republic.

Enrichment of uranium lies at the heart of the controversy over Iran's nuclear programme as the material can be used to power reactors as well as to make the fissile core of an atom bomb.

Soltanieh also said that as per rules of the IAEA, the member countries can enrich uranium to any levels.

"There is no limit to enrichment for members of the IAEA. There is no ceiling," he said.

"The member countries are however required to declare to the agency their enrichment levels and the agency has to verify it."

Soltanieh clarified that Iran's main enrichment plant in the central city of Natanz was enriching uranium up to five percent purity level.

Iran is building a second uranium enrichment plant near the Shiite holy city of Qom and its disclosure in September triggered outrage in the West, after which world powers threatened Tehran could face fresh sanctions if it did not come clean on its nuclear programme.

The Islamic republic is already under three sets of UN sanctions for defiantly enriching uranium at Natanz.

The six world powers -- Britain, Russia, China, Germany, France and the United States -- expressed disappointment at a meeting in Brussels on Friday over Tehran's continued defiance.

"Iran has not responded positively to the IAEA (International Atomic Energy Agency) proposed agreement for the provision of nuclear fuel for its Tehran research reactor," they said after a meeting on Friday.

But the United States said it hopes Iran will still accept the IAEA-drafted fuel deal.

US State Department deputy spokesman Robert Wood said that the United States and the other five powers were not yet "at the point" of closing the window on dialogue.

Speaking to reporters in Washington on Friday, Wood said that the six powers would hold another meeting to discuss "next steps" but added that no date for a meeting had yet been determined.

"We're certainly hopeful that they will change their mind," Wood said.

"I don't know why Iran hasn't been able to say yes up until now. It could have to do with ... the internal political situation in Iran. But it's really hard to say," Wood said.

The Iranian leadership is still battling one of its worst political crises in the wake of the disputed re-election of President Mahmoud Ahmadinejad in June, with Iranian opposition parties claiming the poll was massively rigged.