Iranian media said Russia's top atomic energy official Alexander Rumyantsev and his Iranian counterpart Gholamreza Aghazadeh inked the deal during a tour of the Russian-built power plant at Bushehr in southern Iran.

Under the fuel agreement -- which would cap an 800-million-dollar contract to build and bring the plant on line -- Russia will provide the fuel and fire up the reactor on the condition that Iran sends back spent fuel, which potentially could be reprocessed and upgraded to weapons use.

The United States, convinced that Iran is using an atomic energy drive as a front for a secret bomb programme, has been trying to convince Russia to halt its nuclear cooperation with Iran.

The condition that spent fuel be returned was built into the deal as a concession to widespread international concerns over Iran's ambitions. Iran initially rejected the condition, but eventually relented after two years of negotiations.

The dispute over the fate of spent fuel had pushed the plant's opening back to January 2006, and the deal faced a further snag Satuday when Iran objected to a Russian proposal to further delay firing up the plant's reactor.

According to Russia's ITAR-TASS news agency, the plant is now scheduled to go online at the end of 2006.

"We foresee physical startup at the end of 2006, with the fuel to be delivered around half a year before that," Rumyantsev quoted as saying.

"We signed a confidenial protocol setting out the schedule for delivery of fuel to the nuclear power station at Bushehr," he said, saying the quantity of fuel involved was around 100 tonnes.

Bushehr was raised during a summit between US President George W. Bush and Russian President Vladimir Putin in Bratislava on Thursday. While both publicly agreed agreed that Iran should not develop nuclear weapons, Russia has stuck by the lucrative Bushehr contract.

According to Russian diplomats, the United States has been lobbying against Moscow's involvement in Iran's nuclear programme "on a daily basis" -- and right up until the Bratislava meeting.

But they also point out that the huge contract has "virtually saved Russia's atomic energy industry", and emphasise that there is no way Bushehr -- also under International Atomic Energy Agency (IAEA) scrutiny -- could constitute part of a weapons programme.

Russia is also examining the option of building a second reactor at Bushehr along with plants at other locations.

But the United States argues Iran -- a member of Bush's "axis of evil" -- has no need for nuclear energy because of its massive oil and gas supplies.

Tehran counters that it needs to free up its fossil fuels for export and meet increased energy demands from a burgeoning population. It also denies allegations that it is seeking a bomb, or even the option to build one.

Iran also intends to produce its own nuclear fuel for future plants -- hoped to produce 7,000 megawatts of electricity by 2020 -- a drive at the centre of the current stand-off with the international community.

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