"We still believe that negotiations and a diplomatic solution are the best way out," Wang Guangya said in New York on Tuesday.

Wang, also the current president of the UN Security Council, reiterated that the International Atomic Energy Agency (IAEA) is the best place to discuss the issue; and hoped the visit to Iran by IAEA chief Mohammed ElBaradei would achieve results.

Iran announced late on Tuesday that it had enriched uranium in defiance of a UN call to halt nuclear activity that the West believes is part of a drive to build atomic bombs.

Iranian President Mahmoud Ahmadinejad said Iran had enriched uranium for the first time and would press ahead with industrial-scale enrichment "based on international regulations."

In a televised address, Ahmadinejad said: "I am officially announcing that Iran has joined the group of those countries which have nuclear technology. This is the result of the Iranian nation's resistance."

In response, the United States said that if Iran continued moving in the "wrong direction" it would discuss the next steps with the UN Security Council, which can impose sanctions.

Russia, which has opposed UN sanctions against Iran, echoed the US demand that Teheran halt enrichment activities.

"It goes counter to the decisions of the IAEA and the statement of the UN Security Council," Russia's Itar-Tass news agency quoted a Foreign Ministry spokesman as saying of Iran's announcement. He urged Iran to stop all uranium enrichment work, including research.

The European Union added its voice to concerns over Ahmadinejad's statement, saying it is "regrettable."

The Security Council has told Iran to halt all sensitive nuclear activities and on March 29 it asked the IAEA, the UN nuclear watchdog, to report on the country's compliance in 30 days.

ElBaradei is expected to visit Iran today to seek full Iranian co-operation with the council and IAEA inquiries.

Some Chinese researchers described ElBaradei's visit as a "peace mission."

Hua Liming, a retired diplomat and former Chinese ambassador to Teheran, said ElBaradei would try to persuade Iran to show more flexibility on the nuclear issue.

However, Hua said he is not optimistic about the visit, saying the Iranian nuclear issue is one of the most thorny international problems.