In a brief written statement which took about 24 hours to release, the State Department made no direct mention of its threat of sanctions.
It said Washington was still reviewing Iran’s proposal and would consult further with fellow UN Security Council members.
"We acknowledge that Iran considers its response as a serious offer, and we will review it," the statement said.
Iran’s response was outlined on Tuesday in a 21-page counter-proposal which offered to hold "serious talks" on the nuclear issue.
It followed the offer of a US backed incentives package designed to entice Iran to abandon its enrichment program.
Iran maintains its nuclear activities are used to generate power but uranium enrichment can also be extended to create atomic weapons.
The incentives package was proposed by the US, Britain France, Germany, Russia, and China and Iran gave its response on Tuesday.
Their offer includes help building a civilian nuclear power industry, in return for an end to uranium enrichment.
But it stopped short of accepting an immediate freeze on uranium enrichment.
"The response, however, falls short of the conditions set by the Security Council, which require the full and verifiable suspension of all enrichment-related and reprocessing activities," the statement said.
"We are consulting closely, including with other members of the Security Council, on next steps," it said.
The statement was issued after President George W. Bush and Secretary of State Condoleezza Rice met to discuss the Iran issue.
Dr Rice also spoke by telephone with UN Secretary General Kofi Annan, who is expected to visit the Iranian capital, Tehran, next week.
The UN Security Council adopted a resolution last month giving Iran until August 31 to freeze its uranium enrichment, or face sanctions.
Washington’s reply fell short of an outright rejection of Iran's proposal.
The response indicates that the Bush administration may have found some basis for resolving the ongoing dispute.
Analysts said Washington also had to be careful not to open up a rift with fellow members of the coalition confronting Iran.
Traditionally Russia and China are both reticent to back international sanctions, but Germany may also have reservations.
France, so far Washington's strongest ally on the sanctions option, was more forthright in its response to Iran's proposals.
"The return to the negotiating table is tied to a suspension of its uranium enrichment activity," Foreign Minister Philippe Douste-Blazy said.
But Britain and Germany have yet to take a public stance.
Russia said it was important to explore "nuances" in Iran's response.
While China -- a major trading partner for Tehran -- said sanctions were not the only option for resolving the crisis.
Iran trying to divide UN: expert
"The State Department and the White House are keenly aware that this is an effort by Iran to fracture the coalition," said Jon Wolfsthal, an Iran expert at the Center for Strategic and International Studies in Washington.
Mr Wolfstahl said that while US officials appear intent on pressing for sanctions in the likely event Iran maintains its refusal to immediately end the uranium enrichment, "They recognise that they need to play good defence as well as strong offence."
"They are working furiously, not to figure out what the response is, but to ensure that there's a coordinated response" from all coalition partners, he said.
"If they are seen as acting precipitously, almost welcoming the chance to impose sanctions, it's not going to play very well internationally," he said.
US in dark on Iran: report
A new report by a US congressional committee has warned of significant gaps in US intelligence on Iran.
The report was issued by the House of Representatives Permanent Select Committee on Intelligence.
It raises questions about the accuracy of assessments on Tehran's alleged weapons of mass destruction programs.
The unclassified report has called on US intelligence agencies to offer better information to policymakers.
"There is a great deal about Iran that we do not know," said the report
"The United States lacks critical information needed for analysts to make many of their judgments with confidence about Iran and there are many significant information gaps," it said.
The committee declined to specify where gaps were evident, saying it did not want to tip off the Iranian government.
It suggests more needs to be done to decipher Iran's nuclear, biological and chemical weapons efforts, its political and economic strategy, alleged support for terrorism and involvement in fuelling violence in Iraq.
"US policymakers and intelligence officials believe, without exception, that the United States must collect more and better intelligence on a wide range of Iranian issues," the report said.
Complaints about the structure of intelligence collection struck a familiar chord.
Huge gaps in US knowledge about Iraq's clandestine programs were exposed after the ouster of Saddam Hussein in 2003 and the failure to find weapons of mass destruction, the rationale for war used by the administration of President George W. Bush.
Admitting "American intelligence agencies do not know nearly enough about Iran's nuclear weapons program," the report said the threat had deepened with the election last year of Iran's President Mahmoud Ahmadinejad.
It cites evidence that Iran was bent on making nuclear bombs but the committee also raised the possibility that it could be bluffing.
The report suggests Iran could be using a "denial and deception" campaign, similar to that apparently pursued by Saddam Hussein.
Among its recommendations, the report said intelligence analysts must challenge conventional wisdom and called on agencies to improve human intelligence -- up-close spying on Iran.
More Farsi speakers should be recruited to work in intelligence, and new efforts launched to frustrate Iranian counterintelligence operations.
Suspicion in the United States has centered on the role of Tehran in Iraq, and the report called for better US evaluations of any Iranian support for the insurgency.
The report came as US Brigadier General Michael Barbero said there was "clear evidence" that Iran was funding, training and arming Shiite extremists to destabilize Iraq.
Turning to the explosion of violence in Lebanon, the House report said the extent to which Iran orchestrated the Hezbollah attack on Israeli soldiers which sparked the crisis was unknown.
But it noted there were sound strategic reasons for Tehran to stir tensions.
It called on US intelligence agencies to redouble efforts to "uncover any Iranian agenda" behind the attacks.
"The worst-case scenario is that Iran is run by a government into which we have little insight, and that this government is determined to acquire nuclear, chemical and biological weapons, support terrorism and undermine political stablility in Iraq," the report said.
"However, before we conclude that this worst-case scenario is the reality faced by the United States, the intelligence community must provide policymakers with better insights into developments inside Iran."