"It is a positive step, a step forward," Ahmadinejad said of last week's shock report, which contradicted previous White House warnings that Iran was actively seeking to make a nuclear bomb.

"If they take one or two more such steps, the issues will be totally changed and ... the way will be paved for the resolution of regional and bilateral issues," he told a news conference that contrasted with his usual fiery anti-US invective.

Bush however maintained his hard line. "Iran is dangerous and they will be even more dangerous if they learn how to enrich uranium," he told reporters in Washington.

The National Intelligence Estimate (NIE) -- the consensus of all 16 US spy agencies -- said Iran halted a nuclear weapons programme in 2003 and US allegations about Iran's atomic goals had been overblown for at least two years, though it also said the Islamic republic could have the capability to make a nuclear weapon by 2015.

The White House had accused Tehran of continuing to pursue atomic weapons as it makes enriched uranium, which can be used in a bomb.

"We believe Iran had a secret military weapons program and Iran must explain to the world why they had a program," Bush insisted Tuesday.

The White House said it was up to Iran to take the first steps to mend the two countries' broken ties.

"We totally agree with the Iranian president. One or two more steps are needed," said White House national security spokesman Gordon Johndroe. "Let's start with Iran suspending its uranium enrichment process and go from there."

Ahmadinejad has vowed never to heed calls to suspend uranium enrichment, which he says is aimed at generating power for civilian use.

He said Washington needed to make a major reversal in its Middle East policy and declare the Iranian nuclear crisis over.

"One of the steps that need to be taken is a major change in the regional situation," Ahmadinejad said. "They (the Americans) need to respect the rights of the countries in the region. If this happens, you will be able to see the results."

Pressed over what further steps the United States could take, Ahmadinejad replied: "A second step could be on the nuclear issue. They could say that the issue has been finished."

The two foes have had no diplomatic relations since 1980, when Washington cut ties during the 444-day siege of the US embassy in Tehran by Islamist students in the wake of the Islamic revolution that swept Iran's hardline regime to power.

Despite mounting tensions, Iranian and US diplomats have already held three rounds of talks this year over the security situation in Iraq.

But the six key powers tackling the nuclear dispute have drafted a proposed resolution for further United Nations sanctions on Iran, US State Department spokesman Sean McCormack said Tuesday.

A US-based Iranian dissident meanwhile said Tuesday the NIE was "only partly right," insisting the nuclear program was suspended in 2003 but resumed the following year.

"The weaponization program is alive, is active, and has been resumed since 2004," Alireza Jafarzadeh told AFP. He was formerly the US spokesman for the National Council of Resistance of Iran, an exiled opposition group.

Ahmadinejad said there would be no let-up in Iran's nuclear programme in the years to come, with plans afoot to install 50,000 uranium-enriching centrifuges within the next five years.

"We need to work at the same rhythm for four to five years to have the fuel for a power station," Ahmadinejad said. "We will continue on this path."

sgh-burs/rlp/ch

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