President Bush says it is now up to Iran whether it will suspend sensitive nuclear activities and accept a U.S. offer to hold talks on resolving the dispute.
Mr. Bush told reporters at the White House Thursday that if Iran rejects the U.S. offer, the world will act together through the United Nations Security Council.
Mr. Bush's remarks come as foreign ministers of world powers are meeting in Vienna to discuss how to resolve the dispute over Iran's nuclear program.
U.S. Secretary of State Condoleezza Rice and her counterparts from Britain, Germany, France, Russia and China are finalizing a package of incentives for Iran if it gives up sensitive nuclear activities - and penalties if it does not.
On Wednesday, Rice said the U.S. is prepared to join European talks with Iran if Tehran suspends its uranium enrichment and reprocessing activities.
In Tehran, Iranian Foreign Minister Manouchehr Mottaki rejected the conditions for the talks, saying his country will not give up its right to enrich uranium.
The United States has not held direct, official talks with Iran since 1979.
Russia, China, the European Union and the International Atomic Energy Agency (IAEA) have welcomed the U.S. policy move on Iran. However, Moscow and Beijing say they have some reservations about using tough measures to force Iran to give up its nuclear program.
The West suspects Iran is seeking to develop nuclear weapons, a charge Tehran denies.