"The people involved in the project are frustrated by the suspension," Mohammad Saeedi, the deputy head of Iran's Atomic Energy Organisation, said after a group of some 50 journalists were allowed to accompany President Mohammad Khatami on a tour of the sprawling facility.

"They hope there is an agreement with the Europeans so that all activities can be resumed. Enrichment is Iran's right," he said.

Britain, France and Germany are engaged in a diplomatic effort aimed at securing "objective guarantees" from Iran that it will not seek nuclear weapons, and in return are offering a package of incentives.

But the sticking point is uranium enrichment, a process that can make fuel for atomic energy reactors but also the core of a nuclear weapon.

The Europeans would prefer Iran to abandon its nuclear fuel cycle work altogether, but Iran is so far standing by what it says is a right to be able to fully exploit peaceful nuclear technology.

Enrichment activities have been frozen pending the outcome of the negotiations.

According to Saeedi, Iran only intends to produce reactor fuel at Natanz -- which has for more than two years been at the center of fears the country is striving to acquire the capacity to develop an atomic bomb.

An exiled Iranian opposition group blew the whistle on the site's existence in August 2002, revealing the construction of a vast underground enrichment facility as well as a nearby heavy-water production facility at Arak.

Iran eventually declared both sites to the the UN's nuclear watchdog the International Atomic Energy Agency (IAEA) which has been probing the country ever since.

On the approach to the Natanz facility, dozens of anti-aircraft gun placements could be seen -- a signal that Iran is taking seriously speculation of possible attacks by the US or Israel, which openly accuse the clerical regime of seeking weapons.

But at the same time, Saeedi said the IAEA were being allowed to keep a close eye on the site.

"It is an online monitoring system. Around the clock," Saeedi said. "This is the strictest level of safeguards monitoring."

"We want to produce nuclear fuel, it is a clear request of Iran to do so just like Japan, Germany and Brazil."

Reporters were briefly shown around the interior of the facility -- situated around 270 kilometers (170 miles) south of Tehran -- with explanations stating that it was also earthquake-proof.

No centrifuges were visible during the tour, due to continue later Wednesdy with a visit to a uranium conversion plant near Isfahan.

"We have nothing underground in a way that it is hidden," asserted the Natanz project director in charge of construction, Ehsan Monajemi.

He added the next tour by IAEA inspectors was due on Sunday.

According diplomats, the EU is considering an Iranian proposal to allow the Islamic republic to produce enriched uranium on a small scale with 500 to 2,000 centrifuges instead of the 54,000-centrifuge cascade Iran has said it wants to build.

But Saeedi spoke to reporters of the plan for tens of thousands of centrifuges, and said the proposal to the EU was more of an "idea".

"It is an idea. After a month we will see what comes of it. I hope the Europeans will act in way so we can resume enrichment activities," he said, adding the next Iran-EU meeting was due in April.

US officials however say that if Iran is allowed to keep any sort of enrichment capability, it would gain the capacity to make nuclear weapons.

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