Iran has prepared an "updated nuclear proposal" and is ready to hold negotiations with world powers. This was revealed on Tuesday by the Islamic Republic's chief nuclear negotiator Saeed Jalili.

This was contained in the announcement made a day before six world powers were expected to hold high-level talks in Germany on what to do about Iran's contentious nuclear programme. The West suspects the Islamic state is seeking to build bombs. Iran denies the charge.

"Iran has prepared an updated nuclear proposal and is ready to resume negotiations with world powers," al-Alam, Iran's Arabic-language satellite channel, quoted chief nuclear negotiator Saeed Jalili He was quoted as saying Iran was ready to use its "capacities to remove common concerns on the international scene."

Such language may spark suspicions in Western capitals that the Iran's proposal, like others before, fails to specifically address their concerns about its nuclear ambitions and is a ruse to buy time and avert the threat of more punitive measures.

Iran has repeatedly rejected demands to halt uranium enrichment, which can have both military or civilian purposes, or even freeze it at current levels of output.

U.S. President Barack Obama gave Iran until later this month to take up a six-power offer of talks on trade benefits if it shelves nuclear fuel production, or face harsher sanctions.

The content of Tehran's proposal and the extent to which it addressed the six powers' concerns, was not immediately clear.

"We've seen the reports, though we have not heard anything conclusively from the Iranians on that," White House spokesman Robert Gibbs said. Of Obama's offer of talks, he said: "It's still out there, it is still waiting for a response."

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Asked about the report of Iran's readiness for talks, a Western diplomat told Reuters in Vienna: "If it is confirmed ... it would of course be very welcome."

But a German Foreign Ministry spokesman said it had not yet been contacted by Iran: "For us, the situation hasn't changed."

Germany will host talks on Iran's nuclear programme this week with the United States, China, France, Britain and Russia.

German Chancellor Angela Merkel, speaking at a joint news conference with French President Nicolas Sarkozy, said on Monday Iran should realise how "very serious" the Obama deadline was.

Iranian Foreign Ministry spokesman Hassan Qashqavi condemned those remarks and said sanctions would not work.

"Their interfering comments show that they do not have any realistic or correct understanding about developments in Iran and are a clear interference in other country's internal affairs," the official news agency IRNA quoted him as saying.

An International Atomic Energy Agency report last week said Iran had again ignored U.N. Security Council demands it stop enriching uranium and open up to IAEA investigators "to exclude the possibility of military dimensions" to its nuclear activity.

Washington and its allies may target Iran's gasoline imports in a possible fourth round of sanctions. That could hurt Iran which, although it is the world's number five oil exporter, imports up to 40 percent of its gasoline.

Russia and China have reluctantly backed three rounds of moderate sanctions touching on Iran's nuclear and missile industries since 2006, though they managed to water down some measures before voting for them in the U.N. Security Council.

President Mahmoud Ahmadinejad said back in April, before his disputed re-election in June, that Iran had prepared its own proposals to end the stalemate. But no details emerged.

The six powers originally offered Iran trade, financial and diplomatic incentives in 2006 in exchange for a suspension of enrichment. Iran's response hinted at some flexibility but ruled out suspension as a precondition for talks.

The six improved the offer in June 2008 but retained the precondition. Iran said it wanted a broader peace and security deal, dismissed by Western officials as vague and irrelevant, and rejected any "condescending" formula to shelve its nuclear programme.

Diplomats say Western officials have suggested a face-saving way into talks could be a verified freeze in enrichment expansion, with suspension still the goal in exchange for benefits to Iran. But Tehran has ruled out any such freeze.