VIENNA - Major world powers struck what Britain called a far reaching agreement today on a so-called "carrots and sticks" package for Iran to halt sensitive nuclear fuel work.
"We believe (the proposals) offer Iran the chance to reach a negotiated agreement based on cooperation," British Foreign Secretary Margaret Beckett told a news conference, adding the major powers were prepared to suspend UN Security Council action if Tehran halted uranium enrichment.
Earlier, Iran rejected a US condition for direct talks on its nuclear programme, which the West fears includes plans to build atomic weapons. Iran says its nuclear programme is solely for power generation.
The major powers' accord was reached at a Vienna meeting of foreign ministers from the United States, Britain, France, Russia and China -- all UN Security Council permanent members -- as well as Germany and EU foreign policy chief Javier Solana.
"We have agreed a set of far reaching proposals as a basis for discussions with Iran," said Beckett.
In the past Russia and China have opposed punitive measures, but Beckett did not go into details about the package.
"We are prepared to resume negotiations should Iran resume suspension of all enrichment related and reprocessing activities as required by the (UN nuclear watchdog) and we would also suspend action in the Security Council," said Beckett.
"We have also agreed that if Iran decides not to engage in negotiation, further steps would have to be taken in the Security Council ... We urge Iran to take the positive path and to consider seriously our substantive proposals which would bring significant benefits."
Officials said no details would be issued before the package was presented to Iran, which has said its programme to enrich uranium -- a key ingredient in civilian nuclear power plants and atomic bombs -- was non-negotiable.
US President George W. Bush warned Iran that if it refused to stop enrichment, a process that can yield bomb-grade material, its case would go to the UN Security Council.
"If that is what they decide to do, the next step is for our coalition partners to go to the Security Council," said Bush.
In Washington, US State Department spokesman Tom Casey said Bush had spoken to Russian and Chinese leaders and that the conversations had been positive.
Casey said the United States was willing to "go the extra mile" while Iran was using every excuse it could find not to move forward with discussions. "Iran clearly has a choice that it is going to have to make," he said.
Iranian Foreign Minister Manouchehr Mottaki said Tehran was open to talks with Washington, which severed ties in 1980, but rejected a US demand it stop enriching uranium first.
"We will not give up our nation's natural right (to enrichment), we will not hold talks over it. But we are ready to hold talks over mutual concerns," he said in Tehran.
The White House urged Iran to take several days to examine the US policy shift and said Washington would reserve judgement until then on Tehran's response.
One senior US official said Tehran had only weeks to accept the overture before Western allies would start pursuing UN sanctions.
An EU diplomat at the Vienna meeting said the quick Iranian rebuff on talks did not look final. "We have not presented the package to them yet and nothing they've said so far seems to rule out taking up this opportunity," he said.
Crude oil prices fell below US$71 a barrel, extending a slide sparked by the US offer of dialogue that seemed to ease market fears of the Iran dispute leading to an oil supply crunch.
The Islamic Republic says it wants to purify uranium only to run civilian atomic power plants. But, enriched to a higher level, uranium is the key ingredient in detonating bombs.
Defying UN Security Council calls for it to stop seeking enrichment technology, Tehran said in April it had produced its first batch of low-enriched uranium.
Before the Vienna meeting, diplomats said the incentives were expected to encompass a light-water nuclear reactor and an assured foreign supply of atomic fuel for Iran so Tehran would not need to enrich uranium itself.
Sanctions could entail visa bans and a freeze on assets of senior Iranian officials before resorting to trade measures, they said.
US Secretary of State Condoleezza Rice, who announced the offer of talks yesterday, said a last-resort military option, should talks or sanctions prove futile, remained on the table.
But Washington, angling for firm Russian support, had accepted language in a proposed Security Council resolution to underpin the offer that would rule out an immediate threat of military strikes on Tehran, US and European officials said.
Russia, the Council power with the most leverage on Iran due to hefty trade relations, said the US gesture presented "a real chance" to ease the crisis and urged Tehran to grasp it.