Hailing what she called a "far-reaching" set of proposals, British Foreign Secretary Margaret Beckett urged Tehran to respond positively to benefits offered in order to allay fears that it is seeking nuclear weapons and to avoid facing UN Security Council penalties.

US Under Secretary of State for political affairs Nicholas Burns told reporters the United States was "very satisfied" with the meeting in Vienna.

"We consider it a step forward in our quest to deny Iran a nuclear weapons capability," Burns said.

A draft proposal of the text seen by AFP includes helping Iran build light water reactors for its civilian nuclear energy programme.

According to this text, possible sanctions could include an arms embargo against Iran -- something Russia, a key arms supplier to Iran, and China, a major consumer of Iranian oil, resist but that sanctions would be targeted rather than a full economic or other boycott.

The agreement by six of the world's most powerful nations caps months of diplomacy during which the United States has tried to meet Russian and Chinese demands to avoid escalating the showdown over Iran's nuclear program.

After three years of a UN investigation of Iran's program, a senior US State Department official said Tehran would be presented with the proposals within a few days and would have only "weeks" to answer.

The official said that at the meeting here Thursday, Britain, China, France, Germany and Russia had held to the line of US Secretary of State Condoleezza Rice that Iran must suspend all uranium enrichment activities as a condition for talks to resume.

Enrichment makes nuclear reactor fuel but can also be used for atom bomb material.

Rice had Wednesday set this as a condition for Washington -- which alone has the power and reach to give Iran significant trade, security and technology benefits -- to join European Union negotiators Britain, France and Germany in talks with Iran.

Openness to such talks with Iran is a major policy switch by the United States, 26 years after it broke off diplomatic relations with Tehran when Islamic militants took over the country.

Washington claims Iran is secretly developing nuclear weapons under the cover of what Tehran says is a peaceful effort to generate electricity.

US officials stressed the package offered had bite, despite some diplomats saying the disincentive side had been watered down.

A second US State Department official said: "What we have is a commitment from our partners that if Iran (doesn't take the hand extended of benefits), the Security Council will take the measures necessary and these measures will have teeth," although he avoided using the word sanctions.

Diplomats said this was designed to avoid offending Iran and to draw it into negotiations in a clear effort at more savvy public diplomacy than the confrontational mode of the past.

Beckett said the proposals "offer Iran a chance to reach a negotiated agreement," in comments to reporters after two hours of talks in Vienna of foreign ministers from the six nations, although China was represented by a deputy foreign minister.

She was flanked on one side by Rice, who held talks with various delegations for over five hours.

The British foreign minister said that if Tehran complied, the West "would suspend action in the Security Council," where the United States and Europe seek sanctions against Iran.

If not, she warned, "further steps would have to be taken in the Security Council."

Beckett gave no further details about the package drawn up by the EU negotiating trio, saying Iran must first see the text.

Iranian officials earlier Thursday said they were open to negotiations but rejected the US condition to suspend all nuclear enrichment activities.

US President George W. Bush retorted by warning of Security Council action.

"If they choose not to verifiably suspend we have laid the groundwork for an effective international response," Bush said.

Iranian officials have indicated Tehran may be willing to limit itself to research-scale work using only a small number of centrifuges, the machines that spin uranium gas in order to refine it.

But the US position, reiterated by a senior State Department official Thursday, was that even one centrifuge is too much, otherwise Iran will acquire the "break-out" capability for making nuclear weapons.

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