"The only way forward is through negotiations with all parties sitting at the table, face to face," Annan said in a speech at the University of Tokyo.

"There is also a need to lower the temperature, and refrain from actions and rhetoric that could further inflame the situation," he said, according to the prepared text.

"Otherwise, we will see only an increase in global tensions in an already volatile period, and unwelcome delays in resolving this matter."

The European Union has said it is preparing a "bold package" of incentives for Iran to give up its nuclear program. Russia has also offered to enrich uranium on its own soil on Tehran's behalf to dispel suspicions about the Islamic regime's intentions.

Iranian President Mahmoud Ahmadinejad, who is fond of making confrontational statements, on Wednesday ridiculed the European idea, saying "they think they can take away our gold and give us some nuts and chocolate in exchange."

The United States also said it would not give Iran any security guarantees in exchange for giving up its nuclear program.

But Annan said the international community still had to "redouble our diplomatic efforts to convince the Iranians that it is in their own interest" to "lift the cloud of suspicion hovering over its nuclear activities."

"It would be very much in Iran's interests, as well as those of the world at large, to seize on such openings," Annan said.

Iran says it has enriched uranium for peaceful energy purposes, but Western nations suspect it is a cover to build nuclear weapons.

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