The last-ditch offer from the hardline new President came as the board of the UN nuclear watchdog, the International Atomic Energy Agency (IAEA), was debating how to respond to Iran's defiance of Britain, France and Germany.
Iran's resumption of work at a nuclear plant with the stated intention of converting uranium - a first step towards the possible production of a nuclear weapon - prompted the three European countries to call the emergency meeting.
President Mahmoud Ahmadinejad, speaking after a telephone call with Kofi Annan, the UN secretary general, said: "I have new initiatives and proposals which I will present after my government takes office."
But he also said his country had done nothing illegal by reopening the facility at Isfahan on Monday. Iran's chief delegate to the International Atomic Energy Agency in Vienna stressed that his country would not reverse its decision to resume its nuclear activities.
Even before Mr Ahmadinejad's intervention, the 35 board members of the IAEA had been preparing to issue only a warning to Iran, and were unlikely to recommend referral to the UN Security Council at this stage. The IAEA chief, Mohamed ElBaradei, said the board would "request Iran to reconsider its decision to unravel part of the suspension", under which Tehran had voluntarily suspended uranium conversion in November, while the talks continued. The IAEA board is expected to conclude its meeting today or tomorrow.
President George Bush reacted to the initiative by saying it was a " positive development" that Iran wanted to return to the talks, as he reiterated concerns about Iran's nuclear ambitions. In Washington, the Defence Secretary Donald Rumsfeld accused the Iranian government of being "notably unhelpful" by failing to stop weapons crossing the border into Iraq.
President Ahmadinejad moved to defuse the crisis when both Iran and the Europeans were looking for a dignified way out, as both sides have an interest in continuing the negotiations. Before the board meeting, Russia - which is supplying Iran with a light-water reactor - urged Tehran to stop uranium conversion work, while France appealed to the Iranian authorities to keep talking to the EU.
Diplomats said that by reopening the Isfahan facility, Iran was still at the start of a long chain of activities, and there was still room for negotiation. The country has frozen 95 per cent of its uranium enrichment capability by keeping its plant at Natanz mothballed.
Yet the US and Europe remain suspicious that Iran, which has huge oil and gas reserves, may be bent on developing an atomic weapons programme. The Iranians concealed their nuclear programme from the IAEA for 18 years, prompting the Europeans to seek cast-iron guarantees that any agreement on the nuclear fuel cycle could not be diverted towards building a weapon.
An Iranian dissident who helped uncover Iran's covert programme in 2002 said yesterday that Iran had manufactured about 4,000 centrifuges capable of enriching uranium to weapons grade. The dissident, Alireza Jafarzadeh, said the centrifuges, which had not been declared to the IAEA, were ready to be installed at Natanz, 300 miles south of Tehran. An IAEA spokeswoman, Melissa Fleming, said the agency was taking the allegation seriously and would investigate "should we find anything credible contained within it" . Inflammatory claims tend to surface at sensitive times such as IAEA board meetings, and are often not borne out by investigation.
EU diplomats voiced concern that Mr Ahmadinejad would adopt a tougher stance on Iran's nuclear programme than the former reformist government of Mohammad Khatami. But there had also been speculation that Iran would use Mr Ahmadinejad's inauguration last week as an opportunity to defuse the crisis with the EU which had deepened in recent weeks amid mounting Iranian impatience with the pace of negotiations.
After ignoring deadlines last week, the EU submitted a package of economic and security incentives to Iran on Friday. But Mr Ahmadinejad told Mr Annan the EU proposal was "an insult to the Iranian nation".
Western powers are rewriting rule book
What's at stake in the crisis with Iran?
More than it might seem at first glance. This crisis between the West and Iran over its nuclear activities could be resolved, but if you look at the bigger picture, it appears that the Americans and their key allies such as Britain are trying to rewrite the nuclear rule book. In other words, following the collapse of the Nuclear Non-Proliferation Treaty (NPT) review in May, they are acting unilaterally to prevent non-nuclear powers from even developing nuclear energy domestically.
How are the nuclear powers doing this?
In the case of North Korea, which pulled out of the NPT in 2003, the Americans told Pyongyang during six-party talks - which were suspended last weekend - that the North Koreans no longer had the right to a "safe", light-water plant to produce electricity. The Clinton administration had signed a deal with North Korea in 1994, under which a US-led consortium was to build two light-water reactors in return for Pyongyang mothballing its suspected nuclear weapons programme. This offer is no longer on the table from the Bush administration.
In the case of Iran, Britain, France and Germany are offering help in developing Iranian nuclear energy, while recognising Tehran's treaty rights. But there is a big condition attached: that the nuclear fuel is supplied by another country and that all spent fuel is returned to that country.
How is that strategy being received?
Not too well. Iran is an NPT member which asserts its right to the peaceful development of nuclear energy, as stated in the treaty. It has uranium mines and does not see why it should have to import fuel which would then be reprocessed outside the country in order to reassure the West about its nuclear intentions. It has rejected the Europeans' offer.
North Korea, which boasts that it has developed a nuclear weapon already, insists that the talks it is holding with the US and four other countries will not go anywhere until its right to peaceful nuclear power programmes is recognised. The UN watchdog, the International Atomic Energy Agency, is happy for the Americans and Europeans to negotiate solutions with states because it is not in the IAEA's interest to have uranium enriched all over the place.
Why should countries like Iran play along?
Because strategically, it would end their isolation on the world stage, they would be able to join bodies such as the World Trade Organisation and co-operate with Western partners. So the Iranians, the North Koreans and others would stand to gain political and economic benefits. But they must also consider the situation from a geo-strategic point of view, and that is where Iran and North Korea have so far been prepared to turn their back on the international economic benefits in return for spending billions on what they see as their national interest. So one crisis is likely to lead to another over the fundamental issue of the right to what non-nuclear states say is a peaceful nuclear programme.