Government spokesman Gholam Hossein Elham also promised the Islamic regime would continue to work towards reaching an industrial-scale capacity in enrichment, a process which can be extended to make nuclear weapons.

"The right to enrichment within the framework of the NPT and under the surveillance of the IAEA is an absolute right," he told reporters.

Iran says it wants to make only civilian reactor fuel, a right enshrined by the Non-Proliferation Treaty and overseen by the International Atomic Energy Agency.

"This right and its implementation must be guaranteed. This is not something on which we can back down, whether for research or industrial purposes. This is not something on which we can negotiate or back down," Elham said.

"Nuclear technology is a right that nobody can challenge, and all Iranians are unanimous in claiming this right."

Britain, France and Germany are putting together a package of trade and technology incentives they hope will persuade Iran to halt fuel cycle work, which Washington and its allies say hides an effort to build a nuclear bomb.

The European proposals are to be discussed at a meeting in London on Wednesday of Britain, China, France, Russia and the United States, the five permanent members of the UN Security Council, along with Germany.

But a string of statements from Iran's leadership has underlined that the European offer will be dead on arrival in Tehran.

If Tehran does not accept the deal, sanctions could follow -- including an arms embargo, political and economic measures, a visa and travel ban on selected high-ranking officials and a freeze of assets of individuals and organisations connected to the government.

But Russia and China, both veto-wielding Security Council members with strong economic ties to Tehran, oppose stringent action they fear could worsen matters.

China told visiting UN Secretary General Kofi Annan on Monday that it was "pivotal" to continue dialogue.

"It is pivotal for the relevant parties to continue dialogue and negotiation, to increase trust and find a solution with broad support," State Councillor Tang Jiaxuan told Annan, the official Xinhua news agency reported.

Tang, a former foreign minister, said the Iran nuclear issue concerned the "peace and stability of the Middle East as well as international energy security", a reference to the record highs reached by oil prices amid the standoff.

The Europeans also appear to have differences with Washington, which has ruled out providing security guarantees to Iran as part of the EU package.

"Iran is a troublemaker in the international system, a central banker of terrorism. Security assurances are not on the table," US Secretary of State Condoleezza Rice said Sunday.

Within the region, the wealthy Gulf Arab states have been pushing for continued dialogue.

"There is coordination, of course, in order to find out if it is possible to have a sort of dialogue to continue on a diplomatic course," Omani Information Minister Hamad bin Mohammed al-Rashdi said.

But Israel, continuing to demand a tough line, warned that time was running out to prevent Iran from obtaining a nuclear weapon.

"The technological threshold is very close," Prime Minister Ehud Olmert said on a trip to Washington.

"The question is, when will they cross the technological line that will allow them at any given time, within six or eight months, to have a nuclear bomb?"

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