Israel was refraining Monday from discussing Iran's agreement to ship low-grade nuclear fuel abroad, pending an official response on the matter from the Western powers.

The central concern in Israel was that the deal, brokered by Brazil and Turkey, will delay the onset of harsh United Nations sanctions over Iran's contentious nuclear program.

The Prime Minister's Office and the Foreign Ministry instructed all officials involved in the Iranian nuclear issue, as well as cabinet ministers, not to make any remarks to that effect. The PMO said Israel's response would be released over the coming days.

Diplomatic sources in Jerusalem said that Israel was waiting to see how the Western powers were dealing with issue, adding that China and Russia seemed likely to increase their opposition to sanctions in light of the deal.

China welcomed the swap plan.

"China expresses its welcome (of the fuel swap plan)", Foreign Minister Yang Jiechi
said late on Monday while visiting Tunisia, Xinhua news agency said.

"China has noted the relevant reports and expresses its welcome and appreciation for the diplomatic efforts made by the parties involved to seek an appropriate solution to the Iran nuclear issue."

Despite Iran's apparent concession over its nuclear program, Britain, the United States and France seemed unlikely to halt their efforts for harsher United Nations sanctions.

Tehran agreement to send some of its uranium to Turkey was the revival of a fuel swap plan drafted by the UN with the aim of keeping its nuclear work in check.

But Iran made clear it had no intention of suspending domestic enrichment the West suspects is aimed at making bombs.

"There is no relation between the swap deal and our enrichment activities," Ali Akbar Salehi, head of Iran's Atomic Energy Organization, told Reuters.

He told Iranian television the deal was a move towards nuclear cooperation and "stopping sanctions".

Iran launched work to enrich uranium to a 20 percent level in February. Further enrichment would be needed to make weapons.

The White House said Iran must take steps to prove its nuclear program was for exclusively peaceful purposes.

"Given Iran's repeated failure to live up to its own commitments ... the United States and international community continue to have serious concerns," said White House spokesman Robert Gibbs. "I think we are making steady progress on a sanctions resolution."

A State Department spokesman said the United States would "engage Iran anywhere, anytime, provided Iran is prepared to address the international community's concerns about its nuclear program", but would continue to pursue new sanctions.

Turkish Foreign Minister Ahmet Davutoglu called the fuel swap deal a "historic turning point".

"My expectation is that after this declaration there will not be a need for sanctions," Turkish Prime Minister Tayyip Erdogan said, echoing a statement by Brazil.

The United Nations on Monday called the agreement "encouraging," but said Tehran must comply with Security Council resolutions.

"Any efforts to resolve differences on a diplomatic track in the way Turkey and Brazil have been pursuing with Iran is clearly something that is encouraging in the sense that it is important for there to be discussions," Martin Nesirky, spokesman for UN Secretary General Ban Ki-moon, told reporters.

"But ... the most important thing is that there are already in place UN Security Council resolutions which need to be complied with," he added.

The Security Council has demanded in five resolutions that Iran suspend its uranium enrichment program. Tehran, which rejects Western charges that its atomic program is aimed at producing weapons, says it will continue to enrich uranium.

Britain responded to reports of the agreement by saying work on a new UN sanctions resolution must go on. Iran's move "may just be a delaying tactic", said Foreign Secretary William Hague.

France said the deal would not resolve core concerns.

"Let us not deceive ourselves, a solution to the (fuel) question, if it happens, would do nothing to settle the problem posed by the Iranian nuclear program," French Foreign Ministry spokesman Bernard Valero said in a statement.

Russian President Dmitry Medvedev expressed similar concern. "One question is: will Iran itself enrich uranium? As far as I understand from officials of that state, such work will be continued. In this case ... those concerns that the international community had before could remain," Medvedev said.

But he said he would discuss the issue later in the day with Brazilian President Luiz Inacio Lula da Silva.

"After this, we need to decide what to do: Are those proposals sufficient or is something else needed? So I think a small pause on this problem would not do any harm," he said.

Washington has been leading a push to impose new sanctions, and especially to win the backing of permanent UN Security Council members Russia and China.

Analysts say Monday's agreement may allow Tehran to stave off a fourth round of sanctions and help the leadership reassert its authority after months of anti-government unrest that followed a disputed presidential election last June.

A European Commission spokesman said the deal might be a step in the right direction, but details needed to be seen.

Lula, Erdogan and Iranian President Mahmoud Ahmadinejad clinched the agreement after hours of talks in Tehran, Iranian state media reported. Turkey and Brazil are both non-permanent members of the UN Security Council.

Iran said it had agreed to transfer 1,200 kg (2,646 lb) of its low-enriched uranium (LEU) to Turkey within a month and in return receive, within a year, 120 kg of 20 percent-enriched uranium for use in a medical research reactor.

Iran, which says its atomic program is purely for peaceful purposes, had earlier insisted any such transfers must take place simultaneously and on its territory.

"Iran expressed its readiness to deposit its LEU within one month. On the basis of the same agreement the Vienna Group should deliver 120 kg fuel required for Tehran research reactor in no later than one year," a joint declaration said.

Iranian Foreign Ministry spokesman Ramin Mehmanparast said Iran's LEU would be under the supervision of the Vienna-based International Atomic Energy Agency in Turkey. The IAEA would be notified within a week about the swap deal, he said.

Ahmadinejad called on the five permanent Security Council members -- the United States, Russia, China, France and Britain -- and Germany to open new negotiations with his country.

"They should welcome the major event that took place in Tehran and distance themselves from the atmosphere of pressure and sanctions to create an opportunity for interaction and cooperation with Iran," he said.

Western diplomats say Iran is trying to give the impression that the fuel deal is at the center of problems with the West, rather than its nuclear ambitions as a whole.

They also said removing from Iran 1,200 kg of LEU -- enough, if highly enriched, to make a nuclear weapon -- was less significant now than when it was first proposed because in the months of wrangling over the original IAEA swap deal, Iran's low-enriched uranium stockpile has almost doubled.