Ahmadinejad told UN Secretary-General on Sunday Iran wanted to find a negotiated solution to its nuclear dispute with the West but would not freeze uranium enrichment ahead of any talks.

"On the nuclear issue, the president reaffirmed to me Iran's preparedness and determination to negotiate and find a solution to the crisis," Annan told a news conference in Tehran.

Annan has been touring the Middle East seeking to shore up the ceasefire that halted a 34-day war in Lebanon between Israel and Iranian-backed Hezbollah guerrillas.

UN Resolution 1701 drew up the terms for the ceasefire, including expanding an existing UN peacekeeping force in Lebanon and calling for an arms embargo on Hezbollah.

After meeting Ahmadinejad, Annan said the Iranian president "reaffirmed his country's support for the implementation of Resolution 1701 and agrees with me that we should do everything to strengthen the territorial integrity of Lebanon."

Foreign Minister Manouchehr Mottaki, speaking at the joint news conference, also said Iran was ready "to cooperate with the United Nations in resuming peace in Lebanon and on its borders."

Iran funded and armed Hezbollah in the 1980s but now says its support is primarily moral and political. However, it is still widely believed to be the group's main arms supplier.

Analysts say Iran may have been emboldened in its nuclear standoff by the Lebanon conflict, which Tehran declared a victory for Hezbollah.

Annan's visit came just days after Tehran failed to meet a UN Security Council deadline to halt sensitive nuclear work which the United States says is aimed at producing a nuclear weapon but which Tehran says is to meet energy needs.

"On the nuclear issue, the president reaffirmed to me Iran's preparedness and determination to negotiate and find a solution to the crisis," Annan told a news conference in Tehran.

Annan added that Ahmadinejad had told him Iran "does not accept suspension (of uranium enrichment) before negotiations," as demanded by the UN Security Council.

UN officials said Annan had also requested to meet Supreme Leader Ayatollah Ali Khamenei, who is the highest authority under the Islamic Republic's system of clerical rule. Khamenei has also said Iran would press ahead with its atomic plans.

UN officials said early on Sunday that no meeting with Khamenei had been scheduled so Annan was expected to leave Iran later on Sunday without seeing him.

Iran has repeatedly shrugged off the threat of sanctions, saying they would hurt industrialized countries more than Iran, the world's fourth largest oil exporter, because such a step would drive already high oil prices higher still.

"I think the issue of sanctions is more like a psychological game," Foreign Ministry spokesman Hamid Reza Asefi told a news conference. "Right now we should think about solving the issues through negotiations."

Iran has insisted on holding more talks to resolve the dispute, although some Western diplomats have viewed that as a tactic by Tehran to stall and avoid taking action.

Annan said international peacekeepers were deploying quickly to south Lebanon, joining Lebanese soldiers moving into the region. "That would constitute a credible force," he said, adding that Israeli troops would then be able to withdraw.

More than 500 Italian troops had landed in south Lebanon by mid-morning on Sunday from a force of 800 that had arrived off Lebanon to help keep the peace. Heavy equipment would be flown in later on Sunday, a UN spokesman said.

Italy has pledged 3,000 troops to a UN plan to increase the existing 2,000 peacekeepers in Lebanon to 15,000 to help enforce the truce. Italy's contingent will be the biggest in the force, known as Unifil II.

"The presence of Unifil forces ... and Lebanese forces should accelerate the retreat of the Israeli regime's forces from the land they still have under occupation," Mottaki said. He also called for Israel's "siege" of Lebanon to end quickly.

UN spokesman Ahmad Fawzi earlier told Reuters Annan had raised the issue of the arms embargo with Mottaki when they met on Saturday but he did not give details of the response.

Fawzi also said Ahmadinejad had told Annan in telephone talks prior to his visit that Iran had reservations about some articles of the resolution but would still cooperate in its implementation. He did not say what those reservations were.