Iran has warned it may resume uranium enrichment-related work next week after it failed to reach an agreement with the European Union over the long-term future of its disputed nuclear programme.

The warning sets up a summer crisis in Iran's long-running nuclear dispute with the West.

"Iran will decide whether to resume its uranium enrichment programme this week in Tehran," the official Islamic Republic News Agency (Irna) quoted Tehran's chief nuclear negotiator, Hasan Rohani, as saying.

"Iran is unlikely to start enriching uranium at Natanz, but some activities might be resumed next week at Isfahan's Uranium Conversion Facility (UCF) complex."

Talks may continue

Iran, which denies trying to make nuclear weapons, froze all uranium fuel work, including activities at Isfahan and Natanz, in November as part of an agreement with the EU's big three powers, Britain, Germany and France.

The EU trio and Iran failed to reach a final agreement on Iran's nuclear programme at talks in London on Friday night but agreed to continue the negotiations later.

"Iran will be prepared to continue nuclear negotiations with the Europeans if it resumes part of its enrichment activities," Rohani said.

Low-enriched uranium is used as nuclear reactor fuel while highly enriched uranium can be used in the core of an atom bomb.

EU warning

The EU trio has warned Tehran it will back US calls for Iran's nuclear case to be sent to the Security Council if it resumes enrichment.

But Rohani said Iran would continue its talks with the EU trio and said Security Council referral was unlikely.

"I don't think the option of referring Iran's case to the Security Council is on the table," he said.

By stopping short of resuming the actual enrichment of uranium, a process that can be used to make bomb-grade fuel, Iran hopes to avoid a showdown, a senior EU diplomat in Tehran said.

"They're calculating that just resuming work at Isfahan will be enough to show its strength and anger to us but not enough for us to send its case to the Security Council," he said.

Iranian proposal

The Isfahan facility is designed to convert raw uranium into a gas that can be injected into centrifuges at Natanz for enrichment.

Rohani said the EU trio had asked for more time to consider an Iranian proposal on how to reassure the world it was not developing nuclear weapons.

Diplomats say Tehran has proposed to continue with its nuclear fuel-cycle work, including enrichment, but in gradual phases and under close international supervision.

The European Union and Washington, however, say the only acceptable guarantee that Iran is not developing atomic bombs will be for it to scrap all nuclear fuel work.

"Based on Iran's proposal, all of Iran's nuclear fuel-cycle activities will be peaceful and it (the proposal) will provide security from legal and political perspectives," Rohani said.

"Iran is completely prepared to give assurance to the world that its programme is entirely peaceful," he added.

PHOTO CAPTION

Secretary-General of Iran's Supreme National Security Council Hassan Rohani leaves the Imam Khomeini International Airport, 45km south of Tehran April 30, 2005. (REUTERS)