The call for an answer came after Iran's President Mahmoud Ahmadinejad said the proposal by the world powers was a "step forward" while not predicting an end to the dispute.

US Secretary of State Condoleezza Rice led the cautious western reaction to Ahmadinejad's statement made at a summit in Shanghai.

"We have heard some positive statements from the Iranians," she told reporters after talks in Washington with Italian Foreign Minister Massimo D'Alema.

But she added, "We need an answer, the international community needs an answer (from Iran) so we know if, in fact, the negotiating track is going to bear fruit."

Washington and its allies believe the Iranian programme is a cover for an attempt to build a nuclear weapon. Iran insists it is peaceful.

Leaders of the 25-nation European Union meeting in Brussels also urged Iran to respond quickly and positively to the international package.

In their final summit communique, the leaders reiterated their commitment to a diplomatic solution "which addresses concerns about Iran's nuclear programme while affirming Iran's right to the peaceful use of nuclear energy".

They expressed "full support to the balanced approach" built into the incentives, unveiled June 1 by the Britain, China, France, Russia and the United States -- the five permanent UN Security Council nations -- plus Germany.

"The European Council urges Iran to give an early positive response to this far-reaching initiative and to create the conditions whereby negotiations can resume," the communique said.

Iran, it added, should "take the positive path that is offered."

China and Russia have resisted talk of UN Security Council sanctions against Iran, but China's President Hu Jintao also urged Iran to resume talks in a summit Friday with the Iranian leader, China's state media reported.

"The proposal put forward by China, Russia, the United States and Europe has provided a new opportunity for the settlement of the issue," Hu told Ahmadinejad, according to the official Xinhua news agency.

"We hope the Iranian side will earnestly study (the proposal), positively respond and seek an earlier resumption of the nuclear talks," Hu said.

Under the initiative, the United States would lift some of its trade sanctions on the Islamic republic, which would also get international support for building new light-water nuclear reactors.

Speaking Friday in Shanghai, Ahmadinejad said the international incentives offered in return for the curbing of his nation's nuclear programme were a "step forward" that would be carefully considered.

"We regard the offer of a package as a step forward and I have instructed my colleagues to carefully consider it," Ahmadinejad, in China for the leaders' summit of the Shanghai Cooperation Organization, told a press conference.

"We will give a response in due time in line with the international interests of the Islamic Republic of Iran."

Iran's refusal to say when it will respond to the offer has increased suspicion in western capitals.

But diplomats and analysts following the nuclear dispute say that Iran and the major powers seem to be inching toward each other.

"For once I'll be slightly optimistic because Ahmadinejad has changed his tune a bit," said Christopher Rundle, an analyst in Iranian studies at Britain's University of Durham.

Ahmadinejad's comments came a day after Iran's supreme leader Ayatollah Ali Khameini struck a harder tone when he said the Islamic regime would not bow to pressure over its atomic programme.

A European diplomat close to the International Atomic Energy Agency (IAEA) in Vienna said the Iranian president and the supreme leader's comments were not contradictory.

"No one has rejected the offer out of hand," the diplomat said.

The diplomat said the bottom line was that Iran wants "unconditional talks" as it does not accept the condition that it suspend enrichment.

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