Hopes of a negotiated solution to the Iranian nuclear crisis have suffered a major setback after Iran appeared to rebuff an offer of incentives from world powers in return for suspending its uranium enrichment programme.

The United States, backed by leading European countries, is now set to pursue further sanctions against Tehran while American sabre-rattling is likely to grow louder.

The offer of technological and economic incentives was hand-delivered to Iran on Saturday by Javier Solana, the EU’s foreign policy chief, on behalf of Europe, Russia and China.

Foremost is a proposal to help Iran develop a civilian nuclear programme with light water reactors, which are less prone to diversion into bomb-making than Iran’s current technology. There would be binding guarantees to supply Iran with nuclear fuel and normalised economic ties with the West.

Senior Iranian officials said parliament would study the package before giving a formal response. But just hours into Mr Solana’s visit, Gholam Hossein Elham, Iran’s Government spokesman, declared that halting uranium enrichment — a key condition of the package — was “not debatable”. President Bush swiftly took Mr Elham’s remarks as Iran’s final word.

“I am disappointed that the leaders rejected this offer out of hand,” he said. “A nuclear-armed Iran is incredibly destabilising. It would be a major blow to world peace.” Mr Solana insisted there was still life in the offer and urged Iran to give a “positive” answer. But Kayhan, a hardline daily newspaper close to Iran’s clerical authorities, scorned the proposals yesterday, saying Mr Solana “was not here to negotiate” but to “threaten” Iran.

Mr Solana’s Iranian interlocutors — who did not include Mahmoud Ahmadinejad, the hardline president — indicated that Tehran was treating the offer as an opening gambit from the world powers, not a take-it-or-leave package.

They said Tehran’s response would depend on how the West reacts to Iran’s own package deal to end the stand-off, which it made last month.

Iran’s main proposal was to enrich uranium through a joint international venture on its own soil. Western diplomats say this fails to allay concerns about its uranium enrichment and believe Tehran is now playing for time.

Bolstered by record oil revenues, Iran has withstood three sets of UN sanctions because of its refusal to halt uranium enrichment. The EU is expected to press for new sanctions, probably directed at Iranian banks operating in the bloc, by the end of July.

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