Europe will help Iran to develop a "proliferation-proof" nuclear power programme in exchange for the regime agreeing to halt uranium enrichment on its own soil.

The offer is one of a series of incentives unveiled in Brussels today which are designed to succeed in reining in the Islamic republic where the faltering threat of sanctions has failed.

In advance of a general meeting of EU foreign ministers this afternoon Javier Solana, the EU's foreign policy chief, told reporters that the package would include also include financial aid and possibly defence assistance.

Reuters obtained a draft statement due to be read at the meeting which it quoted as saying that the EU could help Tehran to develop a "safe, sustainable and proliferation-proof civilian nuclear programme".

Margaret Beckett, the new Foreign Secretary and an opponent of nuclear power in Britain, confirmed the suggestion, adding: "If they [the Iranians] do come back into compliance, people will work hard to help them achieve what they really need, or say they need, which is access to civil nuclear power."

The EU's "generous and bold" package was, however, rejected by Tehran in a statement tonight. "Any demand for a suspension or pause (of uranium enrichment) is an illogical and unacceptable demand and undoubtedly will be rejected," Manouchehr Mottaki, the Foreign Minister, said.

The rejection could add to the pressure on China and, in particular Russia, to agree to demands from the United States and Europe to impose a resolution against the regime - including possible sanctions - through the UN Security Council.

Details of Europe's carrot and the US-backed stick will be developed simultaneously and presented to Iran in the "coming weeks".

Iran, the world’s fourth-largest oil exporter, insists that its nuclear plans are solely to develop technology for electricity production. It has also insisted that Israel has no right to exist and must be "wiped off the map".

There was a hint of a rapprochement between Iran and the US last week when President Ahmadinejad sent a personal communication to the White House but any optimism was short-lived.

The Bush Administration dismissed the contents of the letter as rambling polemic and, despite Iran's potential role as powerbroker in Baghdad, has refused to hold direct talks with the regime.

"That’s a matter for America and Iran themselves," Mrs Beckett said."What is important is that there is a clear, strong and consistent message coming from the international community."

As the world powers continue to dither over what action to take against Iran, leaders in Israel are becoming increasingly concerned at the republic's potential to become a nuclear power.

Aharon Zeevi, the former head of Israel's military intelligence service, told Army Radio: "Ahmadinejad is promising the end of history in two or three years’ time and I suggest that we believe him."

Meanwhile, Russia was accused by Tehran of dragging its feet over construction of a nuclear power plant in the Persian Gulf city of Bushehr. An official for Rosatom said that for "technical reasons" the plant would not be completed before 2007. Work began in 1974.

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