Foreign Minister Manouchehr Mottaki told state TV on Saturday the West must "make a decision" whether to accept the Iranian counterproposal to either sell Tehran the fuel or swap it for Iran's enriched uranium.
Mottaki says this is an "ultimatum."
He says the international community "has one month left" to decide, or Tehran will enrich uranium to a higher level, needed for the fuel.
Deputy Foreign Minister Danny Ayalon estimated that Iran's ultimatum would induce the West to impose new sanctions on Iran within a month.
"It's not for certain that the regime in Iran today will be the regime in a year's time," he said at a cultural event in Tel Aviv.
"There is an agreement between Washington, Beijing, and Moscow that a nuclear Iran means the destruction of existing global order."
He also spoke of relations with Turkey, and said it would have to distance itself from Iran. "Turkey is struggling in its identity between Muslim Turkey, which aligns itself with Iran, and secular Turkey, which aligns itself with the West," he said.
Iran dismissed an end of 2009 deadline on a UN-drafted deal to swap enriched uranium for nuclear fuel. The deal would have reduced Iran's capabilities to make nuclear weapons.