Iran has threatened to resume uranium enrichment activities, a process that makes fuel for civilian nuclear power plants but what can also be the explosive core of atom bombs, and has set a deadline of Monday for EU negotiators Britain, France and Germany to offer a package of incentives to be provided in return for Iran guaranteeing its nuclear program is peaceful.

Iran's outgoing President Mohammad Khatami said last week that the Islamic Republic would resume enrichment activities no matter what the Europeans propose although "we prefer to do it with their agreement."

Ahmadinejad said earlier this month that Iran is "faithful to our international obligations (in nuclear matters) but we will not allow the Iranian people to be deprived of their rights" to the peaceful use of nuclear energy.

Meanwhile, Britain warned Iran yesterday against making an "unnecessary and damaging step" by resuming key uranium conversion activities, saying they could jeopardise European Union nuclear talks with Tehran.

The British government, which is spearheading the EU-Iran talks along with France and Germany, also said it would make new proposals in a week -- despite a warning from Iran that it wants new plans on Monday.

The Foreign Office said it was seeking "clarification of Iran's intentions" and urged Tehran to avoid any unilateral move which "would make it very difficult to continue" the negotiations with the European Union.

"We have received reports that the Iranians have decided to restart their uranium conversion facility at Isfahan," suspended since last November under an accord struck in Paris with the so-called E3: Britain, France and Germany.