Western diplomats say refusing to suspend the work that has both military and civilian uses would be tantamount to rejecting the package of incentives offered in return.

File picture of Iranian technicians at the Isfahan Uranium Conversion Facilities (UCF), 420 kms south of Tehran, August 2005. Iran's supreme leader has said the country would press on with its controversial nuclear work, paving the way for a likely showdown with the UN Security Council despite appeals for Tehran to bow to international demands.[AFP]

But refusal will not yet trigger action by the U.N. Security Council, which passed a resolution last month giving Iran until August 31 to halt enrichment or face possible sanctions.

"We are not treating (Tuesday) as a deadline because it is not the Security Council deadline," one Western diplomat said, but added: "If Iran flatly refuses to suspend enrichment, then there will, fairly soon, be more talks in the Security Council."

The United States, France, Britain, Germany, China and Russia offered a package of economic and other incentives in June, aiming to goad the Islamic Republic into stopping work that the West says is being used to build nuclear warheads.

Iran said it would reply by the end of the Iranian month of Mordad, August 22, but the world's fourth largest oil exporter insists it will not abandon what it calls its right to enrich uranium for use in nuclear power stations.

Supreme Leader Ayatollah Ali Khamenei, who has the final word in Iran, vowed on Monday that Iran would not be deflected from its pursuit of nuclear energy. President Mahmoud Ahmadinejad has also been a vociferous opponent of compromise.

Other Iranian officials have stated plainly that Iran will not stop enrichment.

DIVISIONS

Iran has not yet said precisely how it will reply. A senior Iranian official said Iran might give a written response to European ambassadors in Tehran but said mostly likely Iran will deliver the reply in Brussels to Javier Solana, the European Union's foreign policy chief who presented the package.

Iran has said its reply will be "multi-dimensional", suggesting no simple 'yes' or 'no'. Officials have also said Iran wants more talks to resolve the dispute.

Such an approach, say diplomats, could further expose divisions in the Security Council, where the United States, France and Britain back sanctions but Russia and China, the other two veto wielding members, have been wary of such a move.

"If they reject suspension, that's rejection of the package (for Western capitals)," said one Western diplomat, but added that Russia and China might take a different view.

"If they said suspension was negotiable, there would be pressure on (the six powers) to think about it," the diplomat added.

Analysts say Iran is probably calculating any move towards sanctions would start with modest steps, such as travel bans on officials or asset freezes, which it can tolerate because the country's coffers are brimming with petrodollars.

U.S. President George W. Bush said on Monday the international community should "work in concert" over Iran. Washington has previously warned of swift U.N. action if Iran fails to meet U.N. demands.

United States says it wants a diplomatic solution to the standoff, but has also refused to rule out military action.

U.S. investigative journalist Seymour Hersh wrote this month that Washington believed Israel's conflict with Hizbollah could serve as a possible prelude to potential U.S. strikes on Iran's nuclear sites.