World powers sought on Wednesday to pave the way to ending the decade-old and escalating Iran nuclear crisis by laying out a new package of proposals they said would be “of interest” to Tehran. Iran had made a counterproposal and talks would run into a second day, said an Iranian official.

The P5+1 — the U.S., Russia, China, Britain, France and Germany — were, however, expected to tell Iran that its demand for sanctions relief is out of the question until it has taken concrete steps to ease their suspicions.

EU foreign policy chief Catherine Ashton laid out the package of proposals that were thought to include Iran suspending the enrichment of uranium to 20 per cent in return for various sweeteners. “We are putting proposals on the table that are also of interest to Iran,” Ms. Ashton's spokesman Michael Mann told reporters. “There are things we can do for Iran.”

“Iran proposed a package with five items based on the principles of step-by-step and reciprocity, and we are waiting for the reaction of the P5+1 during meetings this afternoon,” said an Iranian official.

The talks in Baghdad are the second in the latest round of negotiations between Iran and the P5+1 group. The first round was held in mid-April in Istanbul

Media reports said the package included a revival of previous attempts at a deal whereby Iran would ship abroad its stockpiles of enriched uranium in return for fuel for a reactor producing medical isotopes.

In return the P5+1 are expected to demand that Iran suspend what they see as the most worrying part of Tehran's nuclear programme, namely 20-per-cent enrichment.

Iran, however, on Tuesday announced it was loading domestically produced, 20-per-cent enriched uranium fuel into the reactor.

The capability to enrich to that level has raised fears in much of the international community that Iran could relatively quickly refine uranium to 90-per-cent purities — the level needed for a nuclear weapon, if it decided to.

The media reports, described by one P5+1 diplomat as “pretty spot on”, said the world powers would not offer to relax existing sanctions or postpone other restrictions due to come into force, as Iran wants. Instead, Iran could be given a pledge of no new sanctions, easier access to aircraft parts and a possible suspension of an EU insurance ban on ships carrying Iranian oil.

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