"We have no problem to send back the nuclear waste or the uranium waste back to the other countries...," Khatami told reporters in translated remarks on the second day of his first official visit to Pakistan.
"We are not insisting to treat them inside Iran because they would also have environmental problems," the president said.
The United States, which has branded Iran part of an "axis of evil" bent on acquiring nuclear weapons, fears radioactive waste from the Bushehr plant could be diverted to the secret development of such weapons.
The United States has also voiced concern over Russian support for Iranian nuclear power plants, with Israel also saying it feared Russia's construction of the Bushehr plant could help the Islamic republic develop a nuclear weapons programme.
But Russia's Atomic Energy Minister Alexander Rumyantsev, currently on a four-day visit to Iran including a tour of the Bushehr project, asserted that Moscow would not give in to any pressure to abandon the plant.
"Russia is determined to complete and finish the Bushehr nuclear power plant," Rumyantsev was quoted as saying on Iranian state radio.
"No excuse and problems can prevent from completion of the plant. Iran and Russia have signed all IAEA (International Atomic Energy Agency) agreements, so therefore all the nuclear activities are according to the regulations of this agency."
Khatami in Islamabad said Iran was also determined to complete the plant, insisting it would be used to produce energy for peaceful purposes only.
"We are determined to develop it (the plant) for energy and peaceful purposes in the country. I repeat, peaceful purpose," he said.
The first reactor at the plant in Bushehr is scheduled to be loaded with fuel by the end of 2003 and come on-stream by mid-2004.
Khatami said: "We believe that atomic or nuclear weapons are not going to bring security for any nation in the world. And some countries may have exerted pressure, for example, on Pakistan to abandon the nuclear programme inside their country.
"But we believe that these countries should press the Zionist regime of Israel that has been announced as having hundreds of nuclear warheads and is a serious threat to international peace and security."
US Secretary of State Colin Powell said last week the United States questioned why oil-rich Iran needed to pursue a nuclear energy programme.
Washington has identified two sites in the centre of Iran -- Arak and Natanz -- that it says are part of Iran's fledgling covert nuclear weapons programme.
Iran's atomic energy authority has labelled the US allegations "propaganda".
Russia has also rejected the concerns, saying there was no evidence for such a programme.
The Vienna-based organisation IAEA said last week its director general, Mohammed ElBaradei, would visit Iran in February to examine the Arak and Natanz facilities and possibly other sites.
Khatami became the first Iranian president to visit Islamabad in 10 years Monday when he arrived in Pakistan for a three-day official visit aimed at strengthening ties strained over differences on neighbouring Afghanistan.
Pakistan first tested nuclear weapons in 1998 and has denounced media reports that it has shared its nuclear secrets with pariah states.