Iranian officials said there was no need for the UN Security Council to take up the nuclear issue again as they were engaged in intensive talks with the International Atomic Energy Agency.

They said the six major powers had made a "mistake" in drawing up a new text on Tuesday to put before the council and warned that Iran would not be deflected from its development of nuclear power even if a third sanctions resolution were adopted.

"They should know that such illegal behaviour will be ineffective against the will of the Iranian people," hardline President Mahmoud Ahmadinejad said.

"Nobody except the International Atomic Energy Agency has the right to make decisions or impose anything on the Iranian nation," state television quoted him as saying.

"From our point of view the nuclear issue has ended and they have committed another mistake in issuing an ineffective resolution."

Iran's lead nuclear negotiator Saeed Jalili gave a similar response as he prepared to hold talks in Brussels on Wednesday with EU foreign policy chief Javier Solana.

"This whole process is illegal," Jalili said.

He said the IAEA had found "no proof of any diversion" of nuclear material by Iran for military purposes and also pointed to a revised US intelligence assessment released last month which found that Iran had abandoned a nuclear weapons drive in 2003.

The contents of the text agreed on Tuesday by foreign ministers of the five veto-wielding permanent members of the Security Council -- Britain, China, France, Russia and the United States -- plus Germany were not released.

But a senior US official said the new draft "increases the severity of the sanctions already in place and will also introduce new elements."

Foreign Minister Manouchehr Mottaki said he saw no need for the text ever to be put before the Security Council as Iran expected to clear up all of the IAEA's remaining questions by the beginning of March.

"This is not an agreement that is going to be implemented right away," he said after talks in Lisbon with his Portuguese counterpart Luis Amado.

"We reckon that the development of the process is going to render this draft redundant," he said, referring to the progress of the talks with the UN watchdog.

Mottaki said Iran had "answered 70 percent of the IAEA's questions" and added: "The process will be completed by March."

Under a so-called "work plan" agreed in August, Iran and the nuclear watchdog had originally set a deadline of the end of last year. That target was put back to the middle of February after talks between Iranian leaders and IAEA chief Mohammed ElBaradei earlier this month.

Mottaki said the watchdog's reports so far had all vindicated Iran.

"We are very optimistic and we hope that EU countries will take part in this positive process," he said, alluding to Jalili's later meeting with Solana.

But US Secretary of State Condoleezza Rice said the make-or-break issue was Iranian compliance with repeated Security Council ultimatums to suspend uranium enrichment -- the sensitive process that can produce either nuclear fuel or, in highly extended form, the fissile core of an atomic bomb.

"I have said that if that suspension takes place, I will meet my counterpart any time, any place, anywhere to talk about anything," Rice told political and business leaders at the opening of the World Economic Forum in Davos.

"If Iran would suspend its uranium enrichment and reprocessing activities, we could begin negotiations, and we could work over time to build a new, more normal relationship -- one defined not by fear and mistrust, but growing cooperation and expanded trade," she said.

Rice said the issue "can and should be resolved through diplomacy," even though US officials have refused to rule out military action as a last resort.

Washington and Tehran have had no diplomatic relations since the aftermath of the 1979 Islamic revolution. Currently the only direct contacts between the two sides are exclusively focussed on Iraq.

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