Foreign Minister Manouchehr Mottaki said Iran has ruled out proposals backed by the major powers for it to ship out more than 70 percent of its stocks before receiving any nuclear fuel in return, the ISNA news agency reported.
France, which had been set to play a central role in the proposed deal, swiftly expressed disappointment with the Iranian position.
"There is a clear and negative response from the Iranians," Foreign Minister Bernard Kouchner said, adding that France will nevertheless continue to speak with Iran. France slams Iran's stance
Mottaki said Iran is prepared to consider the idea of a simultaneous exchange of uranium for fuel but the UN nuclear watchdog, which has been brokering the negotiations, has already said that idea is unacceptable to the Western powers.
"We will definitely not send out our 3.5 percent enriched uranium," Mottaki said.
He said Tehran is ready to "consider swapping the fuel simultaneously in Iran" and is prepared to enter new talks with the major powers.
But International Atomic Energy Agency (IAEA) chief Mohamed ElBaradei already made clear earlier this month that there is no possibility of changing the provision for Iran to ship out its uranium stocks before receiving higher enriched fuel for a Tehran research reactor.
A simultaneous exchange "would not defuse the crisis, and the whole idea is to defuse the crisis," ElBaradei said in an interview with the New York Times.
Western leaders have expressed fears that Iran might covertly divert some of its uranium stocks and enrich them further to the much higher levels of purity required to make an atomic bomb, an ambition Iranian officials strongly deny.
Western governments support the UN-brokered deal because they believe it would leave Iran with insufficient stocks of low-enriched uranium with which to make a bomb.
Iran's envoy to the UN nuclear watchdog Ali Asghar Soltanieh said the main problem is a lack of trust between Tehran and Washington after three decades of diplomatic rupture.
"We have this confidence deficit. Therefore we have to be 100 percent sure that there is a guarantee," Soltanieh told reporters in Vienna.
"We want to be sure that there is a guarantee that we will receive the fuel at the end of the day for the Tehran research reactor."
The IAEA chief told the New York Times there was "total distrust on the part of Iran" and said that compromise proposals were being explored, including the possibility of storing the Iranian uranium in a "third country, which could be a friendly country."
But on November 7, an Iranian official dismissed the idea. "Iran will not send its enriched uranium to any country," ISNA quoted the official as saying.
The official accused ElBaradei of publicly floating an idea that had already been rejected ahead of a visit by Iranian President Mahmoud Ahmadinejad to Turkey, the principal third country that was being proposed.
The issue was again raised during Ahmadinejad's visit to Ankara but on Monday Foreign Minister Ahmet Davutoglu said Turkey is still awaiting Iran's reply.
"The Iranians trust us… but there is a great opposition within Iran. They say the problem is not Turkey, but the fact that the uranium will be taken abroad," the mass-selling Hurriyet daily quoted Davutoglu as saying.
"From our point of view, the door is open. We will store that (the uranium) as a kind of a trustee," he said.
Mottaki said Iran is still considering how much of its stocks of low-enriched uranium it should ship out in any deal.
Under the IAEA-brokered proposals, Iran would send out 1,200 kilogrammes (more than 2,640 pounds), which would then be further enriched by Russia and converted into fuel by France before being supplied to the Tehran reactor.
"The amount they mentioned for the swap is not acceptable … and our experts are still studying it," the Iranian foreign minister said.
US leaders have expressed mounting pessimism about the prospects of an agreement.
In an interview with CNN television on Tuesday, President Barack Obama said the IAEA-drafted proposals are a "credible, legitimate" offer
"Iran, so far, has not been able to say yes to that offer… And that means that if Iran continues to rebuff the international community, us setting up sanctions or other measures that put pressure on them becomes much easier," he said.
