Iran's top nuclear negotiator Saeed Jalili and EU foreign policy chief Javier Solana hailed their latest talks in Geneva on Saturday as "constructive" but Solana lamented that Tehran had still not given a final response.

Iranian President Mahmoud Ahmadinejad described the talks as a "step forward" in the nuclear standoff, which has raised fears of regional conflict and sent oil prices spiralling.

Solana, who presented Iran with a major package aimed at ending the standoff on behalf of world powers last month, said he was waiting for a decision from Tehran on an initial deal to start pre-negotiations.

This would see world powers promising not to impose further UN Security Council resolutions against Tehran, in exchange for Iran not installing any more uranium-enriching centrifuges, he said.

"We have not got an answer to the most important issue... we are looking forward to an answer to these questions in a couple of weeks," said Solana.

Russia's deputy foreign minister Sergei Kisliak, who attended the talks, was quoted by the Ria-Novosti news agency as saying that he too expected a response from Iran in two weeks.

"During his visit to Tehran, Mr Solana presented a text on the framework of negotiations. We have examined this proposal," said Foreign Minister Manouchehr Mottaki in apparent reference to the so-called "freeze-for-freeze" offer.

In a major development, the talks were also attended by the third most senior diplomat from the United States, the first time Washington has had direct contact over the nuclear standoff with Tehran.

However the United States warned Iran would face "confrontation" -- an implicit warning of further sanctions -- if it failed to suspend uranium enrichment, which the West fears could be used to make a nuclear weapon.

"We hope the Iranian people understand that their leaders need to make a choice between cooperation, which would bring benefits to all, and confrontation, which can only lead to further isolation," said State Department spokesman Sean McCormack.

He said the US envoy at the talks, Undersecretary of State William Burns, delivered a "clear, simple message" that Iran must suspend enrichment to have negotiations with the United States.

Iran's press had been cheered by the US involvement in the talks, saying it showed Washington could no longer ignore the Islamic republic.

"The US participation in Geneva talks is both a challenge and an opportunity because if the other side has good will there is an increased possibility of reaching an agreement," said the moderate Kargozaran newspaper.

Iran has already been hit by three sets of UN sanctions over its refusal to suspend uranium enrichment, while the United States and European Union have imposed unilateral measures against its banks.

The main package presented by Solana in Tehran offers Iran full negotiations on technological, economic and political incentives if it suspends uranium enrichment.

Iranian officials have repeatedly said they have no intention of freezing enrichment -- the key demand of world powers for ending the crisis.

In a sign that Tehran believes the diplomatic efforts may take some time, Jalili compared the diplomatic process to weaving traditional Persian carpets where progress in some cases "moves forward in millimetres".

Ahmadinejad said that "all negotiations are a step forward and the negotiations yesterday were negotiations that were a step forward," the official IRNA news agency reported.

Iran denies seeking nuclear weapons, insisting that its programme is designed to provide energy for its growing population for the time when the OPEC member's reserves of fossil fuels run out.

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