US President George W Bush says Iran's initial response to international proposals on the future of its nuclear program appear to be a positive step.

Iran's chief nuclear negotiator, Ali Larijani, said the package of proposals contained "positive steps", but said there were also "ambiguities".

Tehran says it will consider incentives but refuses to halt enrichment.

President Bush said he was encouraged by Tehran's response, but only time would tell if the Iranians were serious.

However, he told reporters: "It sounds like a positive step to me."

The president said he wanted to resolve the crisis diplomatically.

"The choice is theirs to make. I have said the United States will come and sit down at the table with them so long as they're willing to suspend their enrichment in a verifiable way," he said.

The BBC's Jonathan Beale in Washington says rarely has the exchange of words between Washington and Teheran sounded so encouraging.

But there are still signs of caution, our correspondent says, and mutual suspicion could easily resurface.

The US says it wants to give Iran space and time to consider both the incentives and potential penalties, but still expects an answer within weeks.

The US earlier warned Iran a rejection of the proposals could bring UN-imposed penalties.

National pride

Western diplomatic sources have confirmed to the BBC News website that the deal on offer includes permission for Iran to buy spare parts for civilian aircraft made by US manufacturers, and the provision of light water nuclear reactors and enriched fuel.

Other incentives are said to include the lifting of restrictions on the use of US technology in agriculture and support for Iranian membership of the World Trade Organization.

The package was delivered to Tehran by the EU foreign policy chief Javier Solana.

Speaking after a meeting with Mr Solana, Mr Larijani said they had held "constructive" talks, adding that Europe was right to try to use diplomatic negotiations to solve the problem and Iran was open to resuming talks to try to find a logical and well-balanced solution.

Mr Larijani said the proposals contained some ambiguities that needed resolving without specifying what they were.

The BBC's Frances Harrison in Tehran says Mr Larijani's remarks were surprisingly upbeat, and there has been a notable absence of angry anti-Western rhetoric.

Our correspondent says the signs are much more hopeful than last year, when the Europeans offered a package of incentives that Tehran swiftly rejected as too little and too vague.

But she adds that Iran has turned the nuclear issue into one of national pride, and that does it make it difficult to back down without being seen to compromise the country's fierce sense of independence.

Iranian President Mahmoud Ahmadinejad has said Tehran will not abandon its right to nuclear technology under Western pressure and demands that Iran must give up uranium enrichment are unacceptable.

The proposals were agreed by the UK, China, France, Germany, Russia and the US in Vienna.

Western nations fear Iran is enriching uranium to make nuclear weapons, while Tehran says its nuclear program is for peaceful energy purposes.

Photo caption

Nuclear Technician at Asfahan