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Last Updated: Wednesday, 24 May 2006, 18:26 GMT 19:26 UK
Iran nuclear offer bid 'progress'
Generator in Iran's Bushehr nuclear power station
Iran says its nuclear programme is for peaceful purposes
Talks on a package of incentives for Iran to give up its controversial nuclear programme are reported to have made "good progress" in London.

The package was "coming into form both on the incentive side and the disincentive side," said State Department spokesman Sean McCormack.

More discussions between permanent members of the UN Security Council and Germany were likely, he said.

Meanwhile the US has rejected Iran's call for direct talks on the issue.

"We will continue to use appropriate international forums and work with and through our allies when it comes to dealing with the government in Iran," White House spokesman Tony Snow said in Washington.

Israel's Prime Minister Ehud Olmert urged the US to be tough on Iran's nuclear ambitions.

"A nuclear Iran means a terrorist state could achieve the primary mission for which terrorists live and die: the mass destruction of innocent human life," Mr Olmert told a joint session of the US Congress.

"This challenge, which I believe is the test of our time, is one the West cannot afford to fail," he said.

Valuable discussions

Europe's "big three" - Britain, France and Germany - presented their proposals to the US, Russia and China at a closed-door meeting in London.

The package is said to include a number of technology, trade and security benefits for Iran, plus possible sanctions if Iran rejects the offer.

The draft package is expected to offer Iran help with building light water reactors that do not produce plutonium waste, a nuclear fuel bank that would guarantee Iran access to reactor fuel, as well as a series of security guarantees.

"We had some constructive and valuable discussions," said John Sawer, Britain's representative at the talks.

"We made some good progress."

Russia and China - both veto-holding members of the Security Council - want Iran to be persuaded not threatened, and may object to the inclusion of a threat of sanctions.

The US and some European governments are seeking a tough resolution on Iran at the council.

But there have been recent differences between the two over the contents of any deal. Wednesday's meeting was originally meant to have been held last week but was postponed so the differences could be ironed out.

It is now two months since the UN Security Council first ruled that Iran should halt its uranium enrichment activities.

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