"The Iranians should know that this is not going to be a matter that they can stall," Rice told reporters after talks with her Italian counterpart Franco Frattini at her office. "The world is watching…," she said.
Asked if there was no satisfactory response from Iran, Rice said, "We have been very clear that we have two tracks — if one track is not working, then we are going to have to go to the other."
She was referring to the offer of six-power talks with Iran weighed against the threat of increased international punitive sanctions against the country.
Already under three sets of UN Security Council sanctions, Iran has been given a two-week deadline expiring Saturday on a final answer to the offer by the permanent UN Security Council members — Britain, China, France, Russia and the United States — plus Germany.
The offer includes trade incentives and help with a civilian nuclear program in return for Iran suspending uranium enrichment, a process which could be used to make a nuclear bomb.
The offer was officially made earlier this month by EU foreign policy chief Javier Solana, the pointman for the world powers in talks with Iran.
"This is a very, very beneficial package for Iran. But Iran can't have it both ways," Rice said.
On Monday, Iranian President Mahmoud Ahmadinejad expressed the hope that negotiations to end the nuclear crisis would yield progress with both sides finding "common ground" in competing proposals.
Rice said Iran should accept the international offer "to demonstrate that they believe there's common ground."
"This is a good basis for the beginning of pre-negotiations within a six- week period," she said.
Under the offer to Tehran, world powers offered to start pre-negotiations during which Tehran would add no more uranium-enriching centrifuges and in return face no further sanctions — the so-called "freeze-for-freeze" approach.
Italian minister Frattini told Iran that it was "simply not possible to keep a negative role by continuing" with its uranium enrichment activities.
The prospect of Iran making a nuclear bomb "is simply not acceptable. This is the Italian position, which is very firm," he said.
Tehran insists its nuclear program is designed solely for civilian use.
Rice on Tuesday also held talks Tuesday with Israeli Defense Minister Ehud Barak, whose country considers Iran its greatest threat.
Barak said he told senior US officials he met in Washington that "Iran is a major threat to the stability of the whole world and to any considerable world order" and that sanctions against the Islamic republic should be stepped up.
"But ultimately no options could be removed from the table," he said.
Although the United States and Israel continue to say diplomatic and economic sanctions could still dissuade Iran from continuing its nuclear program, the close allies have refused to rule out military action.
Israel is widely believed to be the only nuclear armed state in the Middle East although it has a policy of neither confirming or denying it has a nuclear arsenal and does not allow international inspections.
