Russia has proposed that Iran's nuclear fuel enrichment needs be met on Russian soil, guaranteeing supplies for Tehran's atomic power programme, while reassuring the international community that none of the uranium can be secretly used for a bomb-making programme.
The proposal is seen as a last chance for Iran to avoid being hauled before the UN Security Council for possible punitive action.
However, with the West increasing diplomatic pressure and Iran refusing to resume a moratorium on domestic, small-scale enrichment of uranium, the window of opportunity is narrowing.
Russia, which is Iran's chief nuclear industry partner, has joined the West in insisting that the deal with Iran can only work if Tehran first completely abandons uranium enrichment.
"It is important of course to resume the moratorium on uranium enrichment on Iranian territory," Russian Foreign Minister, Sergei Lavrov, told journalists.
However the head of the Iranian delegation, Ali Hosseini-Tash, ruled out linking "a moratorium on uranium enrichment and talks on the Russian proposal," ITAR TASS reported.
And in Tehran, government spokesman Gholam Hossein Elham said there was "no way that we will limit our (nuclear) activities to the minimum."
Iran has already been reported to the UN Security Council for allegedly suspicious nuclear activities, and the head of the UN nuclear watchdog International Atomic Energy Agency is due to file a report by March 6 that will be crucial in determining whether the world body takes action.
Last month Tehran removed seals at three nuclear facilities, including a uranium enrichment plant at Natanz, and signalled its intention to resume nuclear work.
Iranian Foreign Minister Manouchehr Mottaki told reporters in Brussels that an end to the nuclear standoff could still be negotiated, and he urged the West not to turn to the UN Security Council.
"We believe the time of threats is over," Mr Mottaki said. "There is still time for all the parties to reach a compromise, and I hope they use that time."
With rhetoric on Iran hardening in the West, US Secretary of State Condoleezza Rice is due to begin a Middle East tour partly aimed at seeking support from key Arab states against Iran's policies.