The UN Security Council has met with Iranian officials in Brussels to discuss the offer that would allow Iran to continue to develop a nuclear reactor.

The head of IAEA, the UN nuclear watchdog, Mohammed El Baradei, had urged Iran to accept the offer by the end of 2009. Iran did not respond positively, rejecting a key part of the deal.

"Iran has not engaged in an intensified dialogue and in particular has not accepted to have a new meeting before the end of October to discuss nuclear issues," the powers said in a statement on Friday.

The West fears Iran is trying to develop a nuclear weapons capacity. Iran insists its nuclear program is for entirely peaceful purposes.

El Baradei, who will stand down as head of the International Atomic Energy Agency (IAEA) on December 1, was speaking in Berlin.

"It is a unique opportunity to move from sanctions and confrontation to the process of building trust," he said.

"I believe frankly the ball is very much in the Iranian court," he added. "I hope they will not miss this unique but fleeting opportunity."

On Wednesday, Iranian Foreign Minister Manouchehr Mottaki had said that his country had misgivings about the deal brokered by the IAEA.

It envisages Iran sending about 70% of its low-enriched uranium to Russia and France, where it would be processed into fuel rods for a research reactor in Tehran.

Mottaki suggested Iran would instead agree to exchange its uranium for an equivalent amount of nuclear fuel, but only on its own territory.

Tehran wanted to guarantee it would receive fuel it had contracted for, he said.

The UN Security Council has called on Iran to stop uranium enrichment and has approved three rounds of sanctions so far - covering trade in nuclear material, as well as financial and travel restrictions.