Amid rising hopes for a breakthrough in the standoff over Iran's controversial nuclear aims, Iranian President Ahmadinejad said on Thursday he was open to nuclear talks with the West, but that technology was not up for discussion.

"We will negotiate about common concerns and for clearing up misunderstandings in the international atmosphere," Ahmadinejad said in a speech broadcast on state television. "But we will never negotiate about what kind of technology we want to use."

The international package -- which offers trade, diplomatic and technology incentives in return for a freeze of uranium enrichment -- was drawn up by Britain, France and Germany and backed by the United States, Russia and China.

Iran faces robust UN Security Council action, including a range of possible sanctions, if it rejects the offer.

To enrich or not to enrich

According to diplomatic sources in Vienna and Tehran, the offer would eventually allow Iran to enrich uranium on its territory, but only after the approval of the international community.

The United States on Wednesday refused to confirm or deny those reports, dismissing them as "hypothetical and theoretical." It reiterated that Iran must suspend all uranium enrichment on its soil as a condition for Washington's participation in negotiations with the Islamic republic.

Iran insists its nuclear program is designed purely to generate electricity but the United States and others are concerned Tehran is secretly seeking to build nuclear weapons.

A sudden decision

Meanwhile, the International Atomic Energy Agency (IAEA) was set to issue a report on "the latest observations from inspectors who have just reported their latest information from (the Iranian enrichment facility in) Natanz," IAEA spokeswoman Melissa Fleming said.

Diplomats said IAEA director Mohamed El Baradei had decided only this week to issue a written report, having originally planned to make an oral presentation when the board meets on Monday.

"It must be a very sudden decision," a senior European diplomat said, adding that the report was expected to be short, from one-and-a-half to three pages. "But it will be interesting to see what they have to say on Natanz and on what the situation there is."

Positive signals from Teheran

The IAEA has called on Tehran, most recently in February, to suspend all uranium enrichment activities. The last report, on April 28, made clear that Iran was not heeding the IAEA's call to suspend uranium enrichment.

IAEA inspectors monitor Natanz, in central Iran, as part of routine safeguards under the nuclear Non-Proliferation Treaty.

Iran has since April 11 been enriching uranium at a centrifuge cascade in Natanz, but only to levels of up to five percent, which is refined enough for nuclear fuel but far below what is needed for weapons work.

EU foreign policy chief Javier Solana, who presented the proposal in Tehran on Tuesday, said the next day he was "more optimistic today than a month ago" -- when Iran was ruling out any talk of halting sensitive nuclear work.

Dissenting voices

But while Foreign Minister Manouchehr Mottaki vowed that the proposals would be "carefully" studied, some Iranian MPs were signaling their opposition to the offer.

"We can not suspend our peaceful nuclear activities," the head of parliament's education committee, Ali Abbaspour, told student news agency ISNA Thursday. "We are ready to guarantee that our activity is peaceful. But we cannot accept that we deprive ourselves of scientific research and works."

An influential member of the national security committee, Rashid Jalali Jafari, said Iran welcomes negotiations but reserves its national rights.

"We should accept negotiations, but on the condition that the Europeans do not sabotage our national interests," he told the semi-official news agency Mehr.

Top national security official Ali Larijani has said the proposals contain "positive steps" but also "ambiguities" -- signaling no immediate decision from Tehran was likely.

No more sanctions for Teheran?

Diplomats say the United States has helped sweeten the package by offering to lift certain sanctions if Tehran agrees to an enrichment freeze.

Washington has also agreed to join multilateral talks with Iran if it suspends its uranium-enrichment actavities, offering the prospect of the first substantive talks between the two arch-enemies for 26 years.

Diplomats said that if Iran negotiations go well, enrichment on Iranian soil could be possible -- but that such a situation is years away.

"It leaves the door open to enrichment under certain caveats," a European diplomat told AFP in Vienna, referring to what would almost certainly be a process of many years to verify that Iran's nuclear program is peaceful.

The package only calls on Iran to "suspend all enrichment-related and reprocessing activities" in order to resume talks with European negotiators Britain, France and Germany, and perhaps the United States and even Iranian allies Russia and China, the diplomat said.