TEHERAN - IRAN responded on Friday to an incentives package offered by six world powers aimed at resolving a standoff over its disputed nuclear ambitions.

There was no word on the content of Iran's reply - submitted to EU foreign policy chief Javier Solana - to the offer of talks on economic and other benefits if Teheran halts nuclear work the West suspects is aimed at making bombs.

Iran's chief nuclear negotiator, Mr Saeed Jalili, told Mr Solana by telephone that Teheran had prepared its response by concentrating on common ground between the two sides and with a 'constructive and creative outlook'. The two agreed to hold further discussions later this month, Iranian state radio said.

Iran's official IRNA news agency said the country's ambassador to Brussels presented its reply to Mr Solana, whose office later confirmed it had received it.

The offer of trade and other incentives proposed by the United States, China, Russia, Germany, Britain and France was presented to Iran by Mr Solana last month.

The six powers have told Iran that formal negotiations on the offer, which includes help to develop a civilian nuclear programme, can start as soon as it suspends uranium enrichment.

Iran has said it is willing to enter talks about the package but has repeatedly rejected demands to stop such nuclear work, which can have both civilian and military uses.

The dispute over Iran's nuclear activities has sparked fears of a military confrontation and contributed to oil prices rising to record highs.

Analysts and diplomats say they detect a softer tone from Iran towards the nuclear incentives offer, but that this may be a bid to buy time rather than a shift to accept world powers' key demand of a halt to uranium enrichment.

They say it is also uncertain whether Iran might accept a 'freeze-for-freeze' idea to get preparatory talks going.

Such a step would involve Teheran freezing expansion of nuclear enrichment in return for world powers halting moves to add to three rounds of United Nations sanctions already imposed.

Enriched uranium can be used as fuel for power plants but also, if refined much more, provide material for nuclear bombs. -- REUTERS