Iran was considering on Sunday the latest offer from world powers to end the standoff over its contested nuclear drive but expectations are low after it appeared to reject one of the key conditions.
On Saturday, EU foreign policy chief Javier Solana presented Iran with the proposal, which offers Tehran talks on a range of technological and economic incentives if it suspends sensitive uranium enrichment activities.
"I hope that the answer will be soon and positive," Solana told a news conference at the end of his one-day visit to Tehran.
The package, drawn up by the permanent UN Security Council members plus Germany, aims to resolve a crisis that has raised fears of a regional conflict, pushed up oil prices and seen Iran hit by UN sanctions.
Solana said the offer was "full of opportunities for Iran" and he hoped it would be the "starting point for the real negotiations."
But just hours into Solana's visit, Iran's government spokesman bluntly rejected the main condition of the offer -- that Tehran suspend uranium enrichment, a process that can be used to make a nuclear bomb.
"Iran's stance is clear. The precondition of a halt and suspension of nuclear activities cannot be brought up," Gholam Hossein Elham said.
But Solana said "we continue to ask for a suspension during the time of negotiations and we will see the outcome of negotiations. The negotiations will take months."
US President George W. Bush intervened even before Solana gave his news conference, saying Elham's comments amounted to an outright rejection of the package.
"I am disappointed that the leaders rejected this generous offer out of hand," he said after talks with French President Nicolas Sarkozy.
"It is an indication to the Iranian people that their leadership is willing to isolate them further."
Expectations of a breakthrough had been low, especially after repeated vows by President Mahmoud Ahmadinejad that Tehran would never back down.
Iranian Foreign Minister Manouchehr Mottaki indicated the Iranian response would depend on how the West receives Iran's own package put forward last month offering solutions to a string of world problems.
That package suggests the creation of consortiums to enrich uranium around the world, "including in Iran".
"The response of Iran to the package of the 5+1 world powers will be given taking into account a constructive and logical response of the world powers to Iran's own package," Mottaki said after talks with Solana.
Elham said Iran will make its decision on the package "after a precise examination."
However, the offer makes it clear that Iran must suspend enrichment if it is to enter into negotiations with world powers.
"The elements are proposed as topics for negotiations ... as long as Iran verifiably suspends its enrichment related and reprocessing activities," the text read.
The West wants Iran to halt enrichment over fears it could use the process to make an atomic bomb. Tehran insists it has every right to enrich uranium to manufacture fuel for future power plants.
The price of failure in the talks could be high.
A US State Department official, who asked not to be named, warned that rejection of the package by Tehran would mean "further isolation of Iran and would lead to further international sanctions."
The United States has also never ruled out military action and Bush warned this week that "all options" were still open.
Iran, OPEC's number two producer, vehemently rejects Western allegations it is seeking nuclear weapons, saying it wants only electricity for a growing population whose fossil fuels will eventually run out.
The International Atomic Energy Agency (IAEA) has been investigating the nuclear drive for over five years but has never been able to conclude whether the programme is peaceful.
The offer, is a "refreshed" version of an offer presented by Solana in June 2006, recognises Iran's "right to develop research, production and use of nuclear energy for peaceful purposes."
It also offers a range of technological and economic incentives, including support for the construction of light water reactors, help with supplying nuclear fuel and the normalisation of economic relations with the West.