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The president appeared for the first time to drop long-standing conditions Tehran had set for accepting a UN-brokered proposal that the West hopes will stop enriched uranium being used to build atomic bombs in Iran.
The UN nuclear watchdog, the International Atomic Energy Agency (IAEA), has brokered the proposed plan under which Iran, which denies seeking nuclear weapons, would send its low-enriched uranium abroad in exchange for more highly enriched fuel for a medical research reactor.
"We have no problem sending our enriched uranium abroad," Ahmadinejad told state television.
"We say: we will give you our 3.5 per cent enriched uranium and will get the fuel. It may take 4 to 5 months until we get the fuel.
"If we send our enriched uranium abroad and then they do not give us the 20 per cent enriched fuel for our reactor, we are capable of producing it inside Iran," he said.
In Washington, a US official, speaking on condition of anonymity, said: "If Iran has something new to say, we are prepared to listen."
Iranian Foreign Minister Manouchehr Mottaki said the uranium could be exchanged in Turkey, Brazil or Japan if agreement is reached.
Iran has faced intense Western pressure, under threat of new sanctions, to implement the plan and Ahmadinejad's words came with both conciliatory international gestures and uncompromising moves to crack down on opposition protesters at home.
The president offered to swap three detained US citizens charged with spying for jailed Iranians in the United States. At the same time, Iran said it would hang nine more rioters over unrest following a disputed presidential vote last June.
US Vice President Joe Biden said Iran's leaders were "sowing the seeds of their own destruction" through their harsh crackdown on anti-government unrest.
Western powers accuse Iran of trying to develop nuclear weapons under cover of a civilian enrichment program that Tehran says will fuel a future network of nuclear power plants so it can export more oil and gas.
Ahmadinejad's statement on the nuclear issue -- on which Supreme leader Ayatollah Ali Khamenei has the last word -- was apparently the first time a top official had publicly accepted exchanging low-enriched uranium for nuclear medicine fuel off Iranian soil.
"We made a good faith and balanced offer regarding the Tehran research reactor," White House spokesman Mike Hammer said in Washington. "We believe it makes sense for all parties. If Mr. Ahmadinejad's comments reflect an updated Iranian position, we look forward to Iran informing the IAEA."
Mottaki and the IAEA said last week a deal on uranium enrichment was still possible, despite Western diplomats saying Tehran had in effect turned down the proposal.
Under the proposed deal Tehran would transfer 70 per cent of its low-enriched uranium (LEU) abroad for conversion into special fuel rods to keep the nuclear medicine reactor running.
The plan aims to reduce Iran's reserves below the quantity needed for the fissile core of a nuclear weapon, if the material were refined to a high degree of purity.
"For us the real matter is to reach an agreement about fuel exchange," Mottaki said in an interview with Turkish television TRT. "If we can reach an agreement on the formula then we can talk about the place. About timing we can always talk. Turkey might be a place, Brazil or Japan might be a place."
The United States and European allies are pursuing broader UN sanctions against Iran over its nuclear activity.
The United States, Britain, Germany and France seek a fourth round of UN measures against Iran for refusing to halt uranium enrichment as demanded by five Security Council resolutions.
As well as outlining nuclear plans, Ahmadinejad said three US citizens detained in Iran and charged with spying may be swapped with jailed Iranians in the United States.
A US State Department spokesman said Washington would welcome Iranian willingness to resolve the case.
"We do not like to have any person in jail. Some discussions are going on to swap the three with jailed Iranians in America," Ahmadinejad told state television.
The three were detained after they strayed into Iran from northern Iraq at the end of July. Iran has said the three Americans would be put on trial, without giving a date.
CRACKDOWN ON OPPOSITION
Cracking down on internal dissent, Iran said it would soon hang nine more rioters over unrest that erupted after the June presidential vote. The opposition said the poll was rigged.
"Nine others will be hanged soon. The nine, and the two who were hanged on Thursday, were surely arrested in the recent riots and had links to anti-revolutionary groups," said senior judiciary official Ebrahim Raisi, the semi-official Fars news agency reported.
The two men hanged last week were among 11 people sentenced to death on charges including "waging war against God."
The June election gave Ahmadinejad a second term, but sparked the worst internal crisis in the Islamic Republic's history. The government denied any fraud in the voting.
Opposition leader Mirhossein Mousavi, a former prime minister, said the repression showed the 1979 revolution that overthrew the US-backed Shah "had not achieved its goals."
"Filling the prisons and brutally killing protesters show that the root of ... dictatorship remain from the monarchist era," he said on his Kalemeh website.
Biden, speaking on MSNBC, indicated Washington was sticking to its dual track on Iran of diplomacy and sanctions.
"It's time (for the United States) to reach out, demonstrate that we're not the problem, the hand that gets rejected, and be able to have the whole world stay with us ... against the Iranian government," he said.
Asked whether it was time for "regime change" in Iran since President Barack Obama's effort to engage the Islamic republic had failed to make progress, he said:
"The people of Iran are thinking about, the very people marching, they're thinking about regime change."
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