President Mahmoud Ahmadinejad's announcement that Iran is willing to send its uranium abroad was cautiously welcomed by world powers on Wednesday as a sign Tehran might accept a UN-brokered nuclear fuel deal.

Iran would have "no problem" sending out its stocks of low-enriched uranium (LEU) to be further purified into reactor fuel, Ahmadinejad said late on Tuesday.

His comments came ahead of an expected meeting of world powers on possible new sanctions against Tehran and after the expiry of a January 31 ultimatum for the West to accept Iran's conditions for a nuclear fuel swop.

"There is really no problem. Some made a fuss for nothing. There is no problem. We sign a contract. We give them (world powers) 3.5 percent (enriched uranium) and it will take four or five months for them to give us the 20 percent (enriched uranium)," Ahmadinejad said live on state television.

Russia, Iran's main nuclear trader, welcomed Ahmadinejad's latest remarks.

"If Iran is ready to come back to the original agreement (UN-drafted deal) we can only welcome it," Foreign Minister Sergei Lavrov said in Moscow.

Britain said it would be a "positive sign" by Iran if it were prepared to take up an International Atomic Energy Agency (IAEA) offer to ship some uranium abroad, but stressed talks remain "the crucial issue."

The offer "does not change" the need for Iran to hold further talks with three European Union countries and China, United States and Russia, it added.

The United States reacted cautiously, saying Tehran should submit a formal offer of the deal to international authorities.

"If Mr Ahmadinejad's comments reflect an updated Iranian position, we look forward to Iran informing the IAEA," White House official Mike Hammer said.

Chinese Foreign Minister Yang Jiechi said on Wednesday that it was "urgent" to continue the dialogue," adding that talks were under way on Iran shipping some uranium abroad.

And German foreign ministry spokesman Andreas Peschke told reporters Iran would be judged "by its actions."

"To put this into context, we have been waiting for months for Iran to react in a committal fashion to an offer from the IAEA about enriching uranium abroad," he said.

"If Iran plans finally to respond with such a commitment, then it should do so, and where it belongs, namely the UN atomic agency in Vienna. As far as I know, this has not happened, and as long as it has not happened, we cannot remark on the substance on the comments" by the Iranian president.

Iran's atomic chief Ali Akbar Salehi stressed that talks were still "ongoing" and there was "no final agreement" regarding the deal.

Iran needs nuclear fuel to power its UN-monitored reactor in Tehran but the West fears its uranium enrichment programme is masking efforts to produce atomic weapons -- claims vehemently denied by the Islamic republic.

The IAEA has proposed, in a bid to allay Western fears, that Tehran ship its LEU to Russia and France to be further purified into reactor fuel.

Iran agreed in principle to the offer during talks with world powers in Geneva in October, but later appeared to reject the deal and said it preferred a gradual swap for fuel -- preferably on Iranian soil.

It gave the West until January 31 to respond to its counter-proposals.

Ahmadinejad's latest remarks reiterate his original support of the IAEA-brokered deal, which he repeated during a December interview with AFP.

However, his time frame of four or five months appears to fall short of the period of about a year experts say is needed for 3.5 percent LEU to be enriched to 20 percent.

The United States had said on Tuesday it hopes to consult with China and four other powers in coming days about Iran's nuclear ambitions in a bid to narrow the gap with Beijing over the need for further sanctions.

China is a close ally of Iran with oil interests in the country and is a permanent member of the UN Security Council. It is reluctant to further isolate Iran, which is already under three sets of UN sanctions over its nuclear programme.