"By updating last year's package, the Islamic republic is announcing its readiness for constructive dialogue and interaction," chief nuclear negotiator Said Jalili said, quoted by Iranian news agencies.

But he added that Iran would not halt its nuclear programme, which Western governments fear could be cover for efforts to build an atomic bomb, something Iran strongly denies.

"The Islamic republic will continue its nuclear activities in an active interaction with the International Atomic Energy Agency (IAEA), within the framework of the Non-Proliferation Treaty and its regulations like other members."

President Mahmoud Ahmadinejad said last week he would present a new package for negotiations aimed at resolving the nuclear standoff, after the so-called P5+1 group of world powers called for for dialogue with Iran.

"The Islamic republic... believes that the existing problems in the international arena must be solved through dialogue," Jalili said.

In Washington, US Secretary of State Hillary Clinton told US lawmakers that President Barack Obama's administration was pursuing a dual-track strategy with Iran, when asked about the risk that dialogue fails.

"We are more than willing to reach out to the Iranians to discuss a range of issues," if Tehran reciprocates, Clinton said.

"We are also laying the groundwork for the kind of very tough sanctions, I think you said crippling sanctions, that might be necessary in the event that our offers are either rejected or the process is inconclusive or unsuccessful."

Last week, Ahmadinejad said Iran's own package of proposals would be presented to the P5+1 -- UN Security Council veto-wielding permanent members Britain, China, France, Russia and the United States, plus Germany.

He said the package was a new version of proposals offered by Iran in May 2008, which proposed the formation of consortiums to enrich uranium and manufacture nuclear fuel, including one in Iran.

But Jalali took aim at the demands of the world powers, saying they recalled an approach "that tried to use the language of force and threat, instead of mutual respect for nations mutually.

"This approach has proved its ineffectiveness," Jalili said.

Ahmadinejad on Wednesday kept up a defiant tone when addressing crowds in the city of Varamin south of Tehran that Iran would not give up its nuclear rights despite international pressure.

"Iran will not retreat from its rights," he said, amid chants of "nuclear energy is our undeniable right."

In the light of positive moves by both Tehran and Washington, IAEA chief Mohamed ElBaradei said on Monday he was optimistic about efforts to end the standoff over Iran's nuclear drive.

"I am extremely pleased with the reversal in the policy of the United States from one of confrontation to one of dialogue and mutual respect," he said.

Iranian Foreign Minister Monouchehr Mottaki is due in Brussels on Thursday for an international conference on Somalia which will also be attended by EU foreign policy chief Javier Solana.

EU officials said no separate meeting had been scheduled between the two men but would not rule one out.

Tehran has been slapped with three sets of UN Security Council sanctions for failing to meet demands to suspend uranium enrichment, the process which makes nuclear fuel but also the core of an atomic bomb.

Ahmadinejad said at a press conference in Geneva on Monday that he welcomed the "necessary" shift in US policy towards Tehran after three decades of severed ties, but that he was awaiting "practical changes."

And US President Barack Obama vowed on Tuesday that he would not be deflected from his policy of "tough" direct diplomacy with Iran despite the latest anti-Israel tirade by Ahmadinejad at a UN meeting in Geneva.

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