In another positive sign, the UN nuclear watchdog chief, on a trip to Washington, said Tehran was ready to give up uranium enrichment on its territory for several years as part of a deal to allay Western fears.

Senior officials from Britain, France, China, Russia and the United States -- the five permanent United Nations Security Council members -- as well as Germany, met in the British capital to discuss a European carrot-and-stick proposal aimed at breaking Iran's determination to enrich uranium.

The meeting was called amid an international stand-off over the Iranian nuclear power programme which Washington claims hides the development of atomic weapons -- but which Tehran says is purely for civilian purposes.

US Under Secretary of State Nicholas Burns, who represented the United States in London, described the meeting as "productive".

"The US is encouraged by the progress we have made, and we look forward to Secretary (of State Condoleezza) Rice and her ministerial colleagues meeting shortly to make final decisions on the way forward," Burns said in a statement.

Rice, speaking in Washington after halding talks with UN nuclear watchdog head Mohamed ElBaradei, said "good progress" was made in London.

"We did not expect that they were going to finalise all matters and I think they're still working on some matters," she said.

The top US diplomat added: "I've understood there is some consideration that the (foreign) ministers may meet."

A spokesman for Britain's Foreign Office was also upbeat.

"We have had constructive and valuable discussions and we are encouraged by the progress made, reflecting shared international concern about Iran's nuclear programme and the important issues at stake," he said.

"Political directors will now report to capitals, including on a proposal that ministers should meet in the near future to take final decisions."

The European Union's "big three" -- Britain, France and Germany -- are hoping to coax Iran into suspending uranium enrichment work in exchange for a package of trade and technology incentives.

However, they want Russia and China to join in UN sanctions, including an arms embargo, if Iran does not agree, according to a draft proposal seen by AFP.

ElBaradei, director general of the International Atomic Energy Agency (IAEA), suggested that Tehran was more willing to negotiate than it let on.

But he added that the question of Iran's sensitive atomic research activities was still under discussion.

"The Iranians, as far as I know, agreed in principle that for a number of years (uranium) enrichment should be part of an international consortium outside of Iran," ElBaradei told reporters after his meeting with Rice.

He said the Iranians told him that once negotiations resumed on their nuclear programme, they were ready to apply the "additional protocol" to the Nuclear Non-proliferation Treaty aimed at tightening inspections.

"There is still this issue of Iran doing R and D (research and development) with regards to enrichment and that's an issue still being discussed," ElBaradei said.

Diplomats in Vienna said Iran had told ElBaradei -- who met last week with Iran's top nuclear negotiator Ali Larijani -- that it wants to hold talks with the West but only if there were no pre-conditions.

"Larijani just said: 'We want to talk but as equals, with no pre-conditions'," a diplomat close to the IAEA, who asked not to be named due to the sensitivity of the issue, told AFP.

The United States has refused to rule out taking military action if Iran fails to comply with IAEA demands to stop enrichment.

Citing US officials, Iranian analysts and foreign diplomats, the Washington Post newspaper reported that Iran had requested through intermediaries direct talks with Washington over its nuclear programme.

But the White House vowed there would be no direct negotiations with Iran unless it halted its uranium enrichment programme.

Washington has not had diplomatic relations with Tehran since April 1980.

Iran's hardline government has already rejected the European offer and publicly insists its uranium enrichment programme is not up for negotiation.

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