Israeli Defence Minister Ehud Barak on Sunday warned the six-power group negotiating with Iran to set stringent limits on its nuclear enrichment at forthcoming talks.
"If the P5+1 will set a much lower threshold, like just stop reaching 20 percent, it means that basically the Iranians at a very cheap cost bought their way into continuing their military programmes, slightly slower but without sanctions," Barak said in an interview with CNN television.
"That would be a total change of direction for the worse," he added.
The P5+1, comprising the five permanent members of the UN Security Council plus Germany, are meant to begin talks with Iran on Friday at a still-undetermined venue.
Last month, Israeli Prime Minister Benjamin Netanyahu set three benchmarks for a peaceful settlement of the Iran nuclear issue: that Tehran dismantle its underground nuclear facility in Qom, stop uranium enrichment and get rid of all enriched material in Iran beyond what would allow it to make medical isotopes or generate nuclear power.
"And when I say all the material, I mean all the material, from 3.5 percent up," Netanyahu said, during a March 2 visit to Ottawa on his way to meet US President Barack Obama in Washington.
The New York Times reported late Saturday that the United States and its European allies plan to demand the immediate closing and ultimate dismantling of the Qom plant, a halt in the production of uranium fuel that is considered just a few steps from bomb grade and the shipment of existing stockpiles of that fuel out of the country.
On Sunday, Iran rejected these reported demands, saying it will neither close its Qom nuclear bunker nor give up higher-level uranium enrichment.
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Those two demands were "irrational," Atomic Energy Organisation head Fereydoon Abbasi Davani told ISNA news agency in a lengthy interview.
Iranian President Mahmoud Ahmadinejad's official website said Iran was "ready for negotiations and had unspecified "practical suggestions for the upcoming meeting."
Speaking after a Sunday meeting with Italian counterpart Mario Monti, Netanyahu accused Iran of using talks to delay and mislead the world, and said Israel would follow them.
The US administration says it does not believe Iran has taken a decision to develop a nuclear weapon, or that the time is right for military action, preferring to give sanctions time to work.
But Israel, which sees a possible Iranian nuclear weapon as a threat to its very existence, claims Iran may be on the cusp of "break-out" capability -- when it could quickly build a nuclear weapon -- and does not rule out a pre-emptive strike of its own.
Iran last held talks with the six powers -- Britain, China, France, Germany, Russia and the United States -- in January 2011 with no results.
US President Barack Obama has told Iran the United States would accept Tehran having a civilian nuclear programme if it can prove it is not seeking atomic weapons, the Washington Post said on Friday.
Obama sent that message to Tehran via Turkish Prime Minister Recep Tayyip Erdogan, who delivered it to Iran's Supreme leader Ali Khamenei last week, the newspaper said.