Iran, Brazil and Turkey signed an agreement on Monday over a nuclear fuel swap designed to allay international concern over the Islamic Republic's atomic ambitions.   

Iran said it had agreed to swap 1,200 kg of its low-enriched uranium for higher-enriched nuclear fuel, to be used in a medical research reactor. The exchange would take place in Turkey, Foreign Ministry spokesman Ramin Mehmanparast said.   

Iran, which rejects Western accusations it is seeking to develop nuclear bombs, had earlier insisted such a swap must take place on its territory.   

Turkey and Brazil, both non-permanent members of the UN Security Council, had offered to mediate to find a resolution to the impasse at a time when world powers are in talks to impose a fourth round of UN sanctions on Iran.

Brazilian President Luiz Inacio Lula da Silva and Turkish Prime Minister Tayyip Erdogan discussed the deal with Iranian President Mahmoud Ahmadinejad in Tehran, Iranian state media reported.   

"The swap will take place in Turkey," Mehmanparast told reporters, shortly before the agreement was signed by ministers in front of reporters.

Major world powers had urged Iran to accept a months-old International Atomic Energy Agency plan to ship 1,200 kg (2,646 lb) of its low-enriched uranium -- enough for a single bomb if purified to a high enough level -- abroad for transformation into fuel for a medical research reactor.   

The proposal, backed by the United States, Russia and France, was aimed at giving time for diplomatic talks with Iran.

Tehran agreed in principle to the deal in October but then demanded changes such as a simultaneous swap on Iranian soil, conditions other parties in the deal said were unacceptable.   

Mehmanparast said Iran will officially notify the International Atomic Energy Agency (IAEA) of the agreement "within a week." "The IAEA should inform the Vienna group (United States, France and Russia) of this proposal," he said.

Israel, which along with many Western powers suspects Iran is using its nuclear enrichment programme to mask a drive for atomic weapons, immediately accused Tehran of "manipulating" Turkey and Brazil over the deal.

"The Iranians have manipulated Turkey and Brazil in appearing to accept the enrichment of part of their uranium on Turkish soil," a senior Israeli official in Jerusalem said.

There was no immediate reaction from the IAEA, which had in its proposal suggested Iran send its uranium stockpile to Russia to be further enriched and then on to France to make nuclear fuel for a research reactor in Tehran.

Mehmanparast said the uranium stockpile in Turkey will be under Iran's and the IAEA's supervision. "We hope the other party accepts this proposal." If world powers agree "Iran will ship its low enriched uranium during a period of one month to Turkey," the spokesman said.