The package of incentives -- authored by Germany, France and Britain last week in Vienna, and signed off by the United States, Russia and China -- aims to convince Tehran to halt its controversial uranium enrichment program.

Iran, under its international treaty obligations, has the right to enrich uranium for its nuclear energy program. The West believes, however, that Tehran is using the process to secretly and illegally build nuclear weapons, a charge Iran denies.

The West hasn't made public any details of the package, but it is expected to include incentives, such as technological help with peaceful nuclear energy research and security guarantees, as well as possible penalties in case Tehran doesn't comply.

On Tuesday, Ali Larijani, Iran's top nuclear negotiator, said the package went in the right direction.

The proposals have some "positive steps" in them, but also include "ambiguities" that should be removed, he said. Iran would study the proposals in detail, aiming for a second round of talks to reach a "balanced and logical conclusion," Larijani added.

Observers are optimistic that the new advances may signify a turnaround in what has otherwise been an increasingly bleak diplomatic struggle, with rhetorical barbs escalating almost by the day.

Iran's Foreign Minister Manouchehr Mottaki and the country's highest religious authority, Supreme Leader Ayatollah Ali Khamenei, over the weekend fired some rounds at the West, hinting that Iran, the world's fourth largest oil exporter, could use its valuable resources as leverage against Washington.

Oil prices have skyrocketed as the standoff has intensified; the West is interested in a peaceful solution also to relieve pressure from its domestic economies.

The United States refuses to take a military option off the table, but in an unexpected move last week, offered to end its nearly three-decade long objection to holding direct talks with Iran.

The New York Times said other incentives included a proposal to allow Tehran to purchase aircraft parts from U.S. firm Boeing and its European competitor Airbus, and to buy agricultural technology from the United States, which may lift some trade sanctions on the Islamic Republic.

The newspaper said, relying on an unnamed Western diplomat, the package includes a commitment from the six nations to support Iran's plan for a nuclear energy program for civilian use, including building light-water reactors through joint projects with other countries, and the backing of an Iranian bid for entry to the World Trade Organization.

Solana had arrived late Monday in Tehran, voicing high hopes for the package.

"We want to start new relations based on mutual respect and confidence, he said, according to Iranian news agencies. "We believe that the proposals we plan to present to Iran allow us to enter talks within an atmosphere of mutual respect and confidence."

German Chancellor Angela Merkel called the offer "very fair," voicing her hopes for a turnaround in the conflict.

"I hope Iran shows a positive reaction and understands that there is a broad desire for a diplomatic solution to this conflict," she said Tuesday at a news conference with French President Jacques Chirac. "We from our side have really done everything possible to show our willingness to negotiate."

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