President Mahmoud Ahmadinejad said Iran's nuclear fuel swap deal brokered by Brazil and Turkey last month was "still alive," state television's website reported on Tuesday.

"The Tehran declaration is still alive and can play a role in international relations even if the arrogant (Western) powers are upset and angry," he said in a meeting with visiting Turkish parliament speaker Mehmet Ali Shahin.

Hours later US National Security Council advisor Mike Hammer said diplomacy remains an option in the standoff with Iran but insisted Tehran "needs to take concrete steps to meet its international obligations if it does not want to be further isolated."

"As we have said all along, diplomacy remains an option as we move forward with sanctions," Hammer said, adding that United States, Russia and France had already given its response to Iran's nuclear swap proposal last week.

"It outlined in detail both our technical concerns on the Iranian proposal as well as our long-standing broader concerns on Iran's nuclear program," he said in a statement.

"If Iran indicates that it is prepared to address those concerns constructively, we will be in a position to decide on next steps for reaching agreement and effectively addressing the international community's concerns."

Under the May 17 accord with Brazil and Turkey, Iran agreed to send 1,200 kilogrammes (2,640 pounds) of its low-enriched uranium to Turkey. In return, the Islamic republic would be supplied with higher grade fuel from Russia and France for a research reactor.

The proposal aimed to counter an arrangement drafted by the UN atomic watchdog that had been deadlocked for several months.

However, it was cold-shouldered by world powers which, led by Washington, imposed a fourth set of UN sanctions on Iran last week for refusing to halt its sensitive uranium enrichment programme.

The West suspects the enrichment masks a nuclear weapons drive, a charge denied by Tehran.

Iranian foreign ministry spokesman Ramin Mehmanparast said on Tuesday that Tehran would protest against the sanctions resolution by sending separate letters to all 15 members of the UN Security Council.

Foreign Minister Manouchehr Mottaki is to write to council members against the "illogical approach which led to the adoption of the resolution and to explain the position of our country," he told reporters.

"The resolution is illogical ... and we will not allow anyone to curb our rights."

The resolution was passed with 12 members voting in favour, including all five permanent members of the council, while Brazil and Turkey voted against and Lebanon abstained.

Mehmanparast also said the decision by the European Union to impose separate sanctions on Iran was a "mistake."

"This dual-track politics of the West is a mistake. We have always said that this policy of carrot and stick does not deliver results," he said when asked about the proposed sanctions by the EU.

"All questions can be discussed rationally, but the use of force will lead to contradictory results."

On Monday, EU foreign ministers proposed new sanctions going further than UN restrictions.

The EU measures, which cover the oil and gas industry, with transport and banking or insurance curbs, are expected to be approved at a summit on Thursday.

The foreign ministers, meeting in Luxembourg, said the European Union would seek to prohibit new investment as well as the transfers of technologies, equipment and services to Iran.

"We need to adopt accompanying and supporting measures," to the UN sanctions, EU foreign affairs chief Catherine Ashton said.

But she stressed that sanctions are "not the end game" and that the European Union continued with its twin-track approach, with the offer of talks remaining firmly on the table.

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