Iran says it is willing to swap its low-enriched uranium for more highly processed nuclear fuel, but the exchange must happen on Iranian territory.
The Iranian government made the offer in a document released Tuesday. It is the first formal response to a proposal by the International Atomic Energy Agency for Iran to ship its uranium abroad to be processed into fuel for an Iranian nuclear research reactor.
Earlier this month, Iran said it has begun enriching uranium to a higher level, a process that world powers fear could give Iran the capability to build a nuclear weapon.
The Iranian government says its nuclear program is for peaceful purposes.
The United States and other world powers have been calling for a fourth round of U.N. sanctions against Iran because of its uranium enrichment activity.
Iranian President Mahmoud Ahmadinejad warned Tuesday that Iran would "cut off the hands" of anyone who attacks the country. The statement comes as Israel and the United States have recently revealed they have not ruled out military action against Iran over the country's nuclear program.
Meanwhile, China on Tuesday repeated its call for a diplomatic solution to the dispute.
Israel, which considers Iran its greatest enemy, says it is sending a delegation to China next week for discussions that are expected to focus on the nuclear dispute.
The delegation will be headed by Strategic Affairs Minister Moshe Ya'alon and will include Israel's central bank chief Stanley Fischer.
China, a permanent member of the United Nations Security Council, has been one of the staunchest opponents to imposing additional sanctions against Iran.
Tehran's other traditional ally on the Security Council, Russia, has recently shown willingness to take a stronger stance against the Islamic Republic.
Some information for this report was provided by AFP and Reuters.