The United States is working with European allies and other governments over a possible U.N. response to what the Bush administration characterizes as Iran's inadequate answer to demands that it cease uranium enrichment.

Iran maintains it has offered "positive and clear signals" to resolve the dispute over its nuclear program. But the country could face U.N. sanctions unless it reverses course and agrees to a verifiable halt to enrichment activities that can be a precursor to the manufacture of nuclear weapons.

French Foreign Minister Philippe Douste-Blazy says Iran must suspend uranium enrichment if it wants to return to negotiations, but Russia's foreign ministry said it would continue to seek a negotiated solution and China appealed for patience and more dialogue.

The State Department acknowledged that Iran considered its proposal to be a serious one and promised to "review it."

But the U.S. statement issued Wednesday went on to say that Iran's response to a joint offer of U.S, and European trade and other benefits if the enrichment program was halted "falls short of the conditions set by the Security Council" — full and verifiable suspension of all uranium-enrichment activity.

"We are consulting closely, including with other members of the Security Council, on next steps," it said.

White House spokeswoman Dana Perino said President Bush spoke about Iran Thursday morning with Italian Prime Minister Romano Prodi and German Chancellor Angela Merkel. Perino would not say whether Bush agreed with Merkel that Iran's response was "unsatisfactory," but she noted Wednesday's State Department statement. She would not say whether the leaders were of the same mind about what should be done next.

The United Nations has set a deadline of next Thursday for a formal reply by Tehran.

Bush met with Secretary of State Condoleezza Rice at the White House and then discussed Iran's proposal in a telephone call from U.N. Secretary-General Kofi Annan. Rice telephoned with Javier Solana, the senior European Union diplomat who oversees exchanges with Iran.

No account of either telephone conversation, nor of Rice's meeting with the president, was provided.

The administration has told Iran that it will seek unspecified sanctions in the Security Council if Tehran does not step enriching uranium.

But by not rejecting Iran's proposal outright, the administration indicated there may be a basis for dealing with long-held concerns that Tehran is developing nuclear weapons, an allegation the Iranians deny.

"The diplomats are continuing to look at it," said White House spokeswoman Dana Perino. "We're working with our allies."

The Iranians' offer, which they portrayed as a major advance, appeared to be aimed at least in part at dividing the Security Council members with vetoes — the U.S., Britain and France on one side and Russia and China on the other.

Iran met its self-imposed deadline Tuesday for responding to the U.S.-European offer, which includes the possibility of U.S. help for civilian nuclear programs — but only if Iran stops uranium enrichment.