The European Union is considering helping Iran to acquire a light-water nuclear reactor in return for a binding agreement to finally halt its atomic energy programme, diplomats said today.

The Reuters and AFP news agencies, quoting anonymous sources close to discussions in Brussels and Vienna, said that under the terms of the proposed deal Russia would enrich uranium on Iran's behalf to provide fuel to power the reactor.

The United States made the same offer to North Korea last year in its stalled attempt to persuade Pyongyang to abandon its nuclear weapons programme. Nuclear experts say that light-water reactors are more difficult to adapt for weapons purposes than more sophisticated heavy-water plants

If, as is likely, Tehran refuses to accept the deal, it will be taken in some quarters as confirmation that the world's fourth largest oil exporter wants to extend its nuclear activities beyond the mere production of electricity.

The offer was made against a backdrop of difficult talks among the five members of the UN Security Council - France, Britain, China, Russia and the United States - which could ultimately lead to sanctions or a military strike.

The five countries, and representatives from Germany, are due to discuss possible next steps at talks in London on Friday. China and Russia, both close trading partners with Iran, are opposed to sanctions.

Details of the proposal emerged 24 hours after Javier Solana, the EU's foreign policy chief, said that in return for Iran's co-operation with the International Atomic Energy Agency it would make a bold offer of "proliferation proof" nuclear assistance backed with financial and defence assistance. The EU would also back Tehran's application to join the World Trade Organisation.

Iran has rejected out of hand any deal which requires it to suspend its nuclear programme, which it today described as irreversible and a sovereign right.

Manouchehr Mottaki, the Foreign Minister, said: "Any demand for suspension of, or halt to, our peaceful nuclear activities is illogical and unacceptable and will undoubtedly be rejected."

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