The European Union is expected to present Iran with the proposals within days after Tehran on Wednesday pushed back its threat to resume suspended uranium conversion activities, the precursor to enrichment.

Iran, which is suspected of having ambitions to become a nuclear weapons power, has caused grave concern in the West, which warned Tehran could be hauled before the UN Security Council and face possible sanctions.

Tehran had said it planned to resume the controversial fuel-cycle work on Wednesday -- the day Ahmadinejad took office -- but later signalled it would delay the start until Saturday, in effect giving more time for diplomacy.

The United States welcomed the announcement amid concerns in the West that doing so could have touched off an international crisis.

"It certainly is a positive thing that the steps that the Iranians had previously suggested they would take have not occurred," acting State Department spokesman Tom Casey told reporters.

The United States and its European allies have made clear that any move to restart fuel-cycle activities suspended under an accord struck in November could force them to seek possible UN sanctions again Iran.

"If they've heeded those calls, that's a good thing," Casey said.

The Iranian move gives Britain, France and Germany -- the so-called EU-3 -- time to finalize a new package of economic and security incentives they had been working on to persuade Tehran to renounce its enrichment programme.

A State Department official said the Europeans had informed Washington they would unveil the package over the weekend, perhaps as early as Friday. He gave no other details.

But Iran has said it remains determined to resume its uranium conversion work at the Isfahan plant. The process is the first step in the cycle to produce fuel for nuclear reactors.

In a letter sent to the foreign ministers of the EU-3 on Tuesday, chief nuclear negotiator Hassan Rowhani said this "inalienable right cannot be the subject of arbitrary and subjective criteria".

"Your side has continued to refrain from responding substantively to our proposals, in whole or even in part. We intend to take a minimal step," the letter said.

"The Islamic Republic of Iran stringently desires a negotiated resumption of its enrichment activities and is prepared to continue in good faith and in an expeditious and result-oriented manner its negotiations," it said.

Ahmadinejad, who ever since his shock June election victory has pledged to lead a government of moderation, eschewed making any explicit comment on the nuclear programme and confined himself to vaguer rhetoric.

Iran's supreme leader Ali Khamenei said this week that Iran's enemies, led by the "Great Satan" the United States, knew that Iran would never give in to "blackmail".

"Iranian leaders have no right to give up the nation's economic and political rights. These rights must be defended," Khamenei said.

The IAEA, whose inspectors are currently in Iran on a routine mission, hjave said it would take a week for its team to put in place the necessary checks to monitor Iran's resumption of the uranium conversion.

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