Iran said it has started to study the West's offer to resolve the nuclear crisis and could make counter-proposals through shuttle diplomacy, as Iraq mounted a mediation effort.

Iranian Foreign Minister Manouchehr Mottaki speaks during a joint press conference with his Palestinian counterpart Mahmud al-Zahar in Tehran. Iran said it has started to study the West's offer to resolve the nuclear crisis and could make counter-proposals through shuttle diplomacy, as Iraq mounted a mediation effort. [AFP]

"We have opened the package, and we are studying it, and afterwards we will officially reply to the Europeans," Mottaki was quoted as saying following talks with Palestinian foreign minister Mahmud al-Zahar.

"We hope ... a shuttle diplomacy will be started for the Islamic republic's proposals in the form of amendments or counter-proposals to be studied seriously by the Europeans," he added.

"We are in favour of discussions which are fair, unbiased and without preconditions, that will result in an understanding satisfactory for all sides," he said.

Asked if a suspension of uranium enrichment was raised in the international package, he said: "We can not outline details of the proposals, since we have not announced the content of the package."

Mottaki gave no timing for Iran's official response. "We have not defined a deadline for our reply," he added.

US President George W. Bush said Friday that Tehran had "weeks and not months" to accept the offer and warned the UN Security Council would act if Iran did not comply.

A senior cleric close to Iran's supreme leader Ayatollah Ali Khamenei said the same day that Tehran would not suspend uranium enrichment, amid reports from the UN nuclear watchdog that the country had accelerated enrichment work.

"We must have uranium enrichment between 3.5 to 5 percent and they have to accept it," Ayatollah Ahmad Janati said.

In a related developments, Iraqi Vice President Adel Abdel Mahdi met Iran's top nuclear negotiator in Tehran in a bid to help mediate an end to the crisis, a source close to the Iraqi leader said Saturday.

He said the meeting with Ali Larijani took place on Friday, a day after Abdel Hadi met in Baghdad with the ambassadors of Britain, France and Germany whose countries have been at the centre of efforts to resolve the crisis.

It was unclear who initiated the mediation.

Last month, Iraqi Foreign Minister Hoshyar Zebari said his country respected "the right of Iran to have nuclear technology" but feared an arms race in the area, after a meeting in Baghdad with his Iranian counterpart.

It was not the first time that the Iraqi authorities try to intervene with Iran on an international file.

On March 16, Iran announced that it agreed to negotiate with the United States regarding Iraq at the request of the Iraqi authorities. But, finally, these discussions did not take place.

On a visit Saturday to Egypt, which has called for a nuclear-free Middle East, Larijani said that Muslim countries had the right to develop nuclear energy for peaceful purposes.

Iran's hardline Mahmoud Ahmadinejad has said Tehran remains open to the nuclear negotiations on offer, which contains incentives and threats of sanctions, but refuses to give up on its rights.

Iran on Friday insisted it would not stop enriching uranium even as world leaders warned the Islamic republic to halt the sensitive nuclear activity within weeks or face the consequences.

Tehran considers uranium enrichment to be its right under the nuclear Non-Proliferation Treaty. But Western powers, which suspect Iran's nuclear program has military ambitions, want a suspension of enrichment.