"Beyond that, I am not going to speculate. Beyond that, we are truly into the realm of the hypothetical and theoretical," State Department spokesman Sean McCormack said at a news briefing.

McCormack made the remarks after the Washington Post reported on Wednesday that a confidential diplomatic package backed by Washington and formally presented to Iran on Tuesday leaves open the possibility that Tehran will be able to enrich uranium on its own soil.

That concession, along with a promise of U.S. assistance for an Iranian civilian nuclear energy program, is conditioned on Tehran suspending its current nuclear work until the UN's International Atomic Energy Agency determines with confidence that the program is peaceful.

U.S. officials said that Iran would also need to satisfy the UN Security Council that it is not seeking a nuclear weapon, a benchmark that White House officials believe could take years, if not decades, to achieve.

The Bush administration and its European allies have withdrawn their demand that Iran abandon any hope of enriching uranium for nuclear power, the Washington Post quoted unidentified European and U.S. officials with knowledge of the offer as saying.

The new position, which has not been acknowledged publicly by the White House, differs significantly from the Bush administration's stated determination to prevent Iran from mastering technology that could be used to develop nuclear weapons, the newspaper said.