Speaking at a luncheon with reporters at his residence, Javad Zarif said Tehran "is willing to accept a cap on the level of enrichment."

"This cap I think should be below 10, meaning reactor grade," he said. "Iran is prepared to put in place other measures to ensure fuel produced is not re-enriched and used for nuclear (weapons) purposes."

Early this month, Iran announced that it had managed to enrich uranium up to 4.8 percent and said it had no plan to go beyond that level as this was sufficient for making nuclear fuel to generate electricity.

The process of enriching uranium through cascades of centrifuges lies at the centre of international concern about Iran's nuclear program.

When extended to much higher levels of purity of more than 90 percent, it can produce the fissile core of an atom bomb. But Iran maintains its nuclear program is geared only toward generating electricity.

The five permanent members of the UN Security Council -- Britain, China, France, Russia and the United States -- plus Germany are currently working on a new package of carrots and sticks to convince Iran to abandon any bid to make nuclear arms.

The strategy would combine technology, economic and other incentives for Iran with the threat of an arms embargo and other sanctions if the Islamic republic continues to defy UN demands that it halt uranium enrichment.

But Zarif made it clear that any incentive package "needs to deal with issues that are fundamental to the resolution" of the problem.

"We are not prepared to accept apples for oranges. The solution has to take into consideration Iranian concerns," he added.

Tehran rejects Western allegations that it is covertly seeking to acquire a nuclear weapons capability and insists that, as a signatory to the nuclear Non-Proliferation Treaty, it is fully entitled to conduct uraniium enrichment.

The comments from Iran's UN ambassador followed suggestions on Wednesday from the head of the UN nuclear watchdog, Mohamed ElBaradei, that Tehran may be more flexible on the issue of uranium enrichment than its public statements have indicated.

Baradei, director of the International Atomic Energy Agency (IAEA), said Iran was ready to give up uranium enrichment on its territory for several years as part of a deal to allay Western concerns.

"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," he said after talks in Washington with US Secretary of State Condoleezza Rice.

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