PRESIDENT BUSH said yesterday that the United States was ready to “take the leap” and hold face-to-face talks with Iran for the first time in 27 years, provided that the country suspends its nuclear programme.

The decision comes before today’s crunch meeting in Vienna where Russia, China, France and Germany, as well as the US and Britain, will try to agree a “carrot-and-stick” approach for solving the nuclear stand-off with Iran. This focuses on an offer to reprocess nuclear fuel outside Iran, as well economic benefits to the regime, if it scraps its uranium enrichment programme.

Mr Bush, who held lengthy discussions on the issue with Tony Blair last week in Washington, disclosed yesterday that he had spoken over recent days to Angela Merkel, the German Chancellor, President Chirac of France and President Putin of Russia.

Condoleezza Rice, the US Secretary of State, said before her departure to Vienna: “It’s time to know whether Iran is serious about negotiation or not.” She added that there was “substantial agreement and understanding that Iran now faces a clear choice”.

China and Russia have previously been stalling on the prospect of imposing sanctions against Iran through the UN Security Council. Although no deal has yet been struck over the precise details of the proposals, diplomatic sources said yesterday that there had been “surprising” and “substantial” progress during talks between officials of the six nations in London last week.

Iran insists that its uranium enrichment and reprocessing programme is solely for peaceful purposes but the West is convinced that President Ahmadinejad’s regime is intent on developing a nuclear weapon.

Mr Bush again emphasised his commitment yesterday to finding a negotiated solution, but added: “What you’re seeing is robust diplomacy.” He said that if Iran agreed to suspend its programme immediately, “we will come to the table — I thought it was important for the US to take the leap”.

Until now, the US Administration has spurned pleas from European leaders to participate — on the ground that it could provide added legitimacy to a regime that was a named member of Mr Bush’s “axis of evil”.

Dr Rice described the US decision to take its place at the negotiating table with the “EU3” — Britain, France and Germany — as removing the “last excuse” for talks to fail. Asked whether the US would be willing to re-establish diplomatic relations with Iran, she ruled out a “grand bargain”, but said that a negotiated solution to the dispute could “begin to change the relationship”.

Iran’s first response came from the official news agency IRNA: “Given the insistence by Iranian authorities on continuing uranium enrichment, [Dr] Rice’s comments can be considered propaganda moves,” it stated.

Dr Rice again made clear that the US would take whatever measures it thought necessary to counter a “direct threat” to its “vital interests”. A senior Pentagon source has told The Times that Mr Bush is working on a “short timetable” to see whether negotiations succeed.

Other sources say improved intelligence on Iran’s nuclear programme has increased the chance of it being neutralised by an airstrike and a decision on whether UN sanctions — or a package agreed between Europe, Japan and America — is a workable solution will be made by the end of this year.

Iran voluntarily suspended its nuclear programme while talks were active with the Europeans last year, but resumed and stepped up those activities this spring. Some experts fear that it is three years away from developing a weapon.

Margaret Beckett, the Foreign Secretary, said: “We are all striving to reach a diplomatic solution. The European side’s goal is to present a serious and substantial offer of cooperation, which demonstrates to Iran the benefits that would flow from compliance rather than the further isolation which would result from their failure to do so.

The fresh hope for a negotiated solution in the Middle East helped to cause US stocks to rise sharply. The price of crude oil fell by more than 2 per cent.

BAD BLOOD

January 1979 US-backed Shah forced into exile

November 1979 New leader Ayatollah Khomeini calls US “Great Satan”. Tehran US Embassy stormed, 52 hostages held for 444 days

April 1980 US hostage rescue attempt ends with eight servicemen dead

Nov 1986 Iran-Contra scandal breaks. US sold arms to Iran to free hostages in Lebanon

July 1988 US warship mistakenly shoots down Iranian airliner, killing 290

Jan 2002 President Bush calls Iran, Iraq and North Korea the “axis of evil”

Times Recommends

• Obama: the world can expect better of America
• Gulp! Mystery killer threatens French oyster
• Secret of Northn Lights key to space safety