"Iran's mistrust towards the United States will decrease only when Tehran witnesses that it is continuing positive measures that would depict a real change in US policy towards Iran," the official IRNA news agency quoted him as saying.

In a major gesture, the United States sent a team of aid workers to help in relief efforts after the devastating quake in the Iranian city of Bam that killed up to 35,000 people.

The United States also temporarily and partially suspended unilateral sanctions against Iran, which it has lumped into an "axis of evil," and offered to send a high-level delegation to follow up on the aid.

Iran, however, turned down the offer and said the time was not yet right for contacts at such a level.

Iran and the United States cut diplomatic ties after the 1979 Islamic revolution saw the US-backed shah overthrown and 52 Americans held hostage at the American embassy here for 444 days.

"The United States is now facing a test to give up its inappropriate policies, and refrain from taking any action against Iran in international forums such as the IAEA (International Atomic Energy Agency)," Khatami said after talks with Foreign Minister Yoriko Kawaguchi of Japan, a close US ally.

"The United States should rather approve Iran's proper behaviour and recognise Iran's right to possess peaceful nuclear technology under the supervision of the IAEA," he said.

Washington has accused Tehran of secretly building the atomic bomb under the cover of a nuclear power programme, allegations denied by Iran which has agreed to tougher inspections by the IAEA.

WAR.WIRE