EU foreign policy chief Javier Solana began talks with Iran's nuclear negotiator Ali Larijani at 1600 GMT, less than 24 hours after Larijani met Mohamed ElBaradei, head of the International Atomic Energy Agency.

The talks at the Portuguese foreign ministry headquarters coincide with reports that two permanent UN Security Council members, Britain and the United States, are planning to put forward proposals to strengthen existing sanctions if the Lisbon talks make no progress.

The new measures would include travel bans, the freezing of bank accounts and inspections of Iranian cargo vessels and planes.

The West fears Iran's civilian nuclear programme is aimed at producing nuclear weapons.

Larijani on Friday agreed to define within two months a working plan with the IAEA to resolve outstanding issues over Tehran's nuclear programme, ElBaradei said.

Larijani "committed himself and Iran to work with us to resolve all outstanding issues we discussed: timing, modalities and priorities and we agreed that we will develop within the next two months a working plan by which we hope to resolve the outstanding issues," he said.

ElBaradei told reporters after his talks with Larijani that the main problem for the UN agency was still the difficulty of being able to carry out comprehensive inspections in Iran.

"The fact on the ground is that Iran has the knowledge and the capacity to enrich uranium and we have concerns that this is happening while our ability to do comprehensive inspections is diminished," he said.

"We need to be able to come to a conclusion on the nature of the Iranian nuclear programme."

The issue of uranium enrichment was not discussed. Larijani repeated that Iran had achieved the technical capacity to enrich uranium and said that "any hostile approach towards a nation whose scientists have been capable of developing scientific knowledge at such a level is not correct."

The international community has in effect made a resumption of talks with Tehran conditional on a suspension of enrichment, which would be accompanied by a lifting of UN sanctions.

On Thursday, in an interview with the American magazine Newsweek, Larijani also asked what the Security Council resolutions had achieved. "Have the past two resolutions impeded our activities?" Larijani was quoted as asking.

"They can pass another resolution, and we would make another, longer stride," he said, refusing to elaborate on what this meant but saying it would not necessarily mean accelerating the uranium-enrichment programme.

"We don't see a need for a higher degree of enrichment. Because our basic theory is to (create civilian nuclear) fuel. And we don't need higher (weapons) grades of enrichment," he told the magazine.

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