"The international community has just one month left to decide" whether or not it will accept Iran's conditions, Foreign Minister Manouchehr Mottaki was quoted as saying on state television. "This is an ultimatum."
Reacting to the statement, Germany, one of six world powers engaged in United Nations-backed talks to ensure Iran's nuclear programme is peaceful, said the ultimatum changed nothing.
The "situation has not changed," a German foreign ministry spokesman told news agency AFP. "The proposal of the international community remains valid. Iran must seize this opportunity."
The UN nuclear watchdog, the International Atomic Energy Agency, had proposed Iran ship most of its low-enriched uranium to Russia and France for processing into fuel for the research reactor.
Tehran rejected a December 31 deadline to accept this, risking new UN sanctions. But it said on Tuesday it was ready to swap its low-enriched uranium for nuclear fuel abroad, while insisting the exchange happen in stages.
Iran is already under three sets of UN sanctions for refusing to abandon its sensitive programme of uranium enrichment, the process which produces nuclear fuel or, in highly extended form, the fissile core of an atomic bomb.
The United States and some other Western countries suspect Iran is seeking to develop nuclear weapons under the guise of a civilian nuclear power programme. The Islamic republic adamantly denies this, saying its nuclear programme is strictly for the production of energy.
World powers have been pushing Iran to accept the UN-brokered deal and are also mulling plans to impose fresh UN sanctions against it for dismissing the year-end deadline.
On Wednesday, US State Department spokesman Darby Holladay said the West would still focus on "dual-track policy" regarding the Islamic republic.
"Even as we leave the door open to engagement," world powers agree that Iran will pay the consequences if it does not meet its international nuclear obligations, Darby said.
The UN Security Council's five permanent members - the United States, Russia, China, France, and Britain - plus Germany are "in the process of considering next steps consistent with our dual-track policy," he said.
A UN diplomatic source in New York has said preliminary work on drafting a sanctions resolution was likely to begin in mid-January.
Iran's defiant "ultimatum" comes as the country faces its worst domestic crisis whereby protesters against Ahmadinejad's June re-election have been harshly confronted by the authorities.