"We have made very clear, and the president has made very clear that, while taking no option off the table, the US policy is that this can work diplomatically," Rice said during a visit to Israel.
"And that is where we have been focused and that is where all our energies are, I emphasise all our energies, because we have just, through Javier Solana, proposed a package to the Iranians," Rice said.
She made the remarks a day after EU foreign policy chief Javier Solana made a short visit to Tehran to deliver an offer from world powers aimed at resolving a six-year nuclear crisis with Iran.
The deal offers talks on a package of technological and economic incentives, so long as Tehran suspends uranium enrichment activities, which the West fears could be used to make an atomic bomb.
Hours into Solana's visit to Tehran, Iranian government spokesman Gholam Hossein Elham announced that Iran would reject any package that does not allow it to enrich uranium, the key sticking point in the crisis.
But Rice said: "We will see what the actual reaction is, as opposed to the reaction before they read it."
US President George W. Bush on Saturday said in Paris he was disappointed that Iran had rejected the "generous" European offer.
"I am disappointed that the leaders rejected this generous offer out of hand. It is an indication to the Iranian people that their leadership is willing to isolate them further," Bush said at a joint news conference with French President Nicolas Sarkozy.
Solana has said the offer he made on behalf of Britain, China, France, Germany, Russia and the United States is "full of opportunities" for Iran.
Solana held meetings with Iranian Foreign Minister Manouchehr Mottaki and top national security official Saeed Jalili. Both were keen to emphasise Iran's answers would depend on how the West responds to Tehran's own package.
Iran last month launched a package which it described as an all-embracing attempt to solve the problems of the world, including the nuclear crisis. It suggests setting up consortiums to enrich uranium, including in Iran.
Israeli Deputy Prime Minister Shaul Mofaz's said in a newspaper interview earlier this month that "if Iran continues its nuclear weapons programme, we will attack it."
