Iranian President Mahmoud Ahmadinejad said on Thursday that "conditions are ready" for a nuclear deal with world powers following a change in Western policy from "confrontation to cooperation."

Ahmadinejad welcomed the prospect of an agreement on uranium enrichment as Iran prepared to hand over its formal response to proposals drawn up by the UN nuclear watchdog in Vienna later on Thursday.

The hardliner, whose presidency had seen Iran on a collision course with the West over its failure to heed repeated UN Security Council ultimatums to suspend uranium enrichment, said Iran was keen to respond positively to the new approach.

"We welcome fuel exchange, nuclear cooperation, building of power plants and reactors and we are ready to cooperate," the president said in a speech in Iran's second city of Mashhad broadcast live on state television.

He said the West had previously talked of "halting and suspending everything, but now they are talking about fuel exchange, nuclear cooperation, building nuclear power plants and reactors. They have moved from confrontation to cooperation."

He said that as a result "the conditions for nuclear cooperation are ready".

"Now the International Atomic Energy Agency is returning to its actual position which is to help independent nations and to create healthy relations with other nations," he said, referring to the UN watchdog which drew up the proposed deal between Iran and the major powers.

Alluding to the three sets of UN sanctions imposed on Iran over its failure to suspend uranium enrichment, Ahmadinejad said the West had previously adopted a policy of "confrontation and threats, but today it has changed its attitude and we welcome it.

"We accept any hand extended to us in trust and honesty, without any plot or lie. But if that proves not to be the case, our response will be the same as we gave to (US president George W) Bush and his cronies," he said to cheers from the crowd.

He renewed Iran's refusal to give up its right to nuclear technology.

"The world and some inside Iran should know that until the time that people are giving support to this government, we will not retreat an inch from the right of the Iranian nation," he said.