SHANNON (Reuters) - U.S. Secretary of State Condoleezza Rice on Thursday denied Washington and its European allies had a proposal that would let Iran pursue limited nuclear activities to try and avoid a confrontation with Iran.

The proposal was reported on Thursday in the New York Times and said Iran would be allowed to conduct limited nuclear activities on its own soil but would move the process of enriching all of its uranium to Russia.

"There is no U.S.-European proposal to the Iranians. I want to say that categorically," Rice told reporters en route from Washington to the Middle East where she will visit Bahrain, Saudi Arabia, Israel and the West Bank.

"We are doing what we have been doing for some time which is keeping diplomatic partners apprised of their thinking about the future of their negotiations with the Iranians," she added.

Rice met with the head of the U.N. nuclear watchdog, Mohammed ElBaradei in Washington on Tuesday and discussed Iran and how to deal with threats posed by its nuclear activities.

The paper said ElBaradei planned to present the offer to Iran on behalf of the United States, Britain, Germany and France.

"I don´t want to get into any further details over what may be being contemplated by the parties to the negotiations (with Iran)," Rice said, adding:

"We do hope that if there is a way for the Iranians to accept a way forward that would give confidence that they are not in fact trying to seek a nuclear weapon under cover of a civilian nuclear power program."

IAEA MEETS THIS MONTH

The International Atomic Energy Agency (IAEA) meets this month to discuss Iran after a meeting in September warned Tehran it could be sent to the U.N. Security Council unless it complied with a September IAEA resolution urging it to cooperate with U.N. inspectors and to freeze all nuclear fuel work.

The United States accuses Iran of secretly developing atomic weapons but Tehran counters its nuclear activity is aimed at generating electricity and not weapons.

Rice reiterated U.S. concern about enrichment and reprocessing by Iran and said the United States was worried that Iran could be left with stockpiles of UF6, a gaseous form of uranium which can be used for nuclear reactions.

The newspaper report said Rice wanted to give Iran a deadline of two weeks to respond to the proposal but the top U.S. diplomat said this was not the case.

"I believe that is not the way to conduct diplomacy. Obviously a meeting is coming up on November 24 and we will have to decide what to do. But this will be at a time of our choosing," she said.

She said the United States believed it had enough votes to push through a referral to the Security Council, which could ultimately lead to sanctions.

The September resolution passed 22 to 1 with only arch U.S. foe Venezuela opposing it. However 12 nations, including Russia and China, abstained from voting and could be hard to convince in another round.

ElBaradei and President George W. Bush agree on a plan to create international sources of supply of nuclear fuel so that nations could have no excuse to start their own facilities to enrich uranium which could ultimately build a weapon.

Rice said this was a good way of allowing countries to fulfill their fuel needs without a proliferation risk. (© Reuters 2005 11/10/05)