UN: World diplomats meeting in Vienna last night have agreed a "far-reaching" package of incentives and sanctions to encourage Iran to restart negotiations over its nuclear programme.
Foreign ministers of the five permanent members of the UN Security Council and Germany said they were prepared to discuss the package and Iran's nuclear programme - but only if it suspends its programme of uranium enrichment.
"We urge Iran to take the positive path and to consider seriously our substantive proposals which would bring significant benefits to Iran," said British foreign secretary Margaret Beckett.
She said the six nations would present Iran with the proposals, on which she failed to elaborate, and made clear that a rejection would land Tehran before the Security Council.
Earlier in the day, Iran rejected giving up its "natural entitlement" to enrich uranium as a precondition for any fresh talks.
Tehran says this enrichment programme is to produce energy; western countries are concerned it is to build a nuclear bomb.
However Iranian foreign minister Manouchehr Mottaki said Iran was "ready to hold talks on issues of mutual concern", holding out the prospect of movement.
In Vienna last night, diplomats from Germany and the five permanent Security Council members said they were optimistic that Iran would accept the "carrot and stick" package on offer.
It is understood to promise aid for Iran's civilian nuclear programme as well as trade and security bonuses.
The package is likely to guarantee Iran a light-water nuclear reactor and a foreign supply of enriched uranium to obviate the need for domestic enrichment.
However the package will also contain firm measures to be taken if Iran refuses to co-operate. China and Russia have so far opposed sanctions against Iran, but there were signs of a shift in policy yesterday.
A spokesman for the Chinese foreign minister repeated Beijing's opposition to "arbitrary sanctions" yesterday, but welcomed the US offer of talks. Russian officials called the offer a "real chance" to end the crisis.
Unnamed US officials said Russia and China now support the idea of a strongly-worded resolution at the Security Council if Iran "does not accept this offer of negotiations, or accepts and then does not negotiate in good faith".
In return, the US has reportedly agreed to a resolution that would rule out immediate military action on Iran.
US secretary of state Condoleezza Rice offered to open talks with Iran in a speech on Wednesday.
Washington suspended diplomatic relations with Iran over the 1979 seizure of the US embassy and hostages in Tehran by Iranian militants.
Dr Rice said the US was interested in "new and positive" relations with Tehran, but she said full diplomatic ties would not be reinstated and that Iran would face "great costs" if it disregarded international concern over its enrichment programme.
President Bush said yesterday the "choice is with the Iranians" after holding talks with the Russian and Chinese presidents.
"The most positive thing about all the conversations I've had is there's uniform agreement that the Iranians should not have a nuclear weapon," said Mr Bush.
Asked what would happen if Iran didn't co-operate, Mr Bush said he would "expect Russia to participate in the UN Security Council" if Iran remained "obstinate".
French prime minister Dominique de Villepin expressed optimism that the international disagreement over Iraq would not be repeated on Iran.
