Talking to a joint press conference after meeting with his visiting counterpart Iranian President Mahmoud Ahmadinejad, Susilo said that the currently stalled dialogue on the nuclear issue could be re-started.

"I believe that there is room to continue the dialogue and negotiation. Indonesia hopes that we can cooperate and decline tension," said Susilo, adding that Indonesia had good relations with Iran and its critics.

State spokesman Dino Pati Djalal Patti later said that Iran was very receptive to Indonesia's offer of mediation.

After the meeting, both leaders signed a memorandum of understandings for the arrangement of mutual administrative assistance in customs matters, scientific and technological cooperation, small and medium-sized industry cooperation, and cultural exchange program and energy cooperation.

The Iranian president arrived in Jakarta on Wednesday morning. He is to attend the meeting of eight developing countries in the Indonesia's beautiful resort of Bali over the weekend.