EU diplomat Javier Solano has said the European Union is preparing a new package of measures as it attempts to convince Iran to curb its nuclear ambitions.
He said the package would include economic, nuclear and possibly security guarantees.
Iran's nuclear programme is being discussed at a meeting of EU foreign ministers in Brussels.
The EU and the United States fear that Iran, despite its denials, is trying to develop nuclear weapons.
Iran, the world's fourth-largest oil exporter, insists its nuclear plans are purely to make electricity.
Mr Solana said Tehran's affirmations that it would reject any demand to stop peaceful nuclear work were a misunderstanding of EU policy.
'We have said over and over again that we have nothing against Iran having nuclear capabilities if they are strictly devoted to the production of energy,' he said.
He added that Iranian demands to be allowed to conduct enrichment for research purposes were still something that at the moment the EU cannot accept.
