Iran has told the International Atomic Energy Agency it does not accept the terms of a deal to ease concerns about its nuclear programme, diplomats say.

For months, the Iranian government has criticised the offer to ship low-enriched uranium abroad in return for fuel, but never responded formally.

But diplomats say Tehran is now suggesting an alternative involving a simultaneous exchange on its territory.

Correspondents say the proposal is very unlikely to be acceptable to the West.

The US and its allies fear Iran is attempting to develop nuclear weapons. Iran insists its nuclear programme is entirely peaceful.

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