TEHRAN (AFP/Reuters) - Iran has decided to turn down proposals from the major powers for the supply of nuclear fuel, a leading member of parliament said on Saturday, in a serious setback for UN-brokered efforts to allay Western concerns about its atomic ambitions. Under the plan thrashed out in talks with France, Russia and the US, Iran was to have shipped out most of its stocks of low-enriched uranium in return for fuel for a research reactor in Tehran. The proposals were designed to assuage fears that Iran could otherwise divert some of the stocks and enrich them further to the much higher levels of purity required to make an atomic bomb. But officials, who strongly deny any such intention, had expressed mounting concern that Irans arch-foe Washington might welch on the deal and Tehran might ship out its uranium without receiving anything in return. We do not want to give part of our 1,200 kilos of enriched uranium in order to receive fuel of 20 per cent enrichment, said Alaeddin Borujerdi, the influential head of parliaments national security and foreign policy committee. This option of giving our enriched uranium gradually or in one go is over now, he told the ISNA news agency. We are studying how to procure fuel and (Ali Asghar) Soltanieh is negotiating to find a solution, he added, referring to Irans envoy to the UN nuclear watchdog. A spokesman for the International Atomic Energy Agency said on Saturday that it was still waiting for the formal response from Soltanieh. But a second member of the Iranian parliamentary committee also said that response would be negative. We were not against the exchange, the ISNA news agency quoted Hossein Naghavi Hosseini as saying. But during the negotiation, they were unable to give Iran the confidence and so the response of the Islamic Republic of Iran is negative. But Russia, which would have further processed the Iranian uranium under the UN-brokered deal, warned sanctions against Iran should not be ruled out if it fails to agree to restrictions on its nuclear programme. If an agreement is reached on programmes for the enrichment of uranium and its use in Iran for peaceful means, then we will gladly participate in these programmes, Russian President Dmitry Medvedev told German weekly magazine Der Spiegel in an interview. If the Iranian leadership takes a less constructive position, then anything is possible in theory, Medvedev said in an advance copy of the interview released on Saturday, adding he had discussed the issue with US President Barack Obama. We wouldnt want this to end with international sanctions because sanctions, as a rule, take us in a very complex and dangerous direction. But if there is no movement forward, nobody is ruling out such a scenario. The Kremlins top foreign policy aide, Sergei Prikhodko, said on Oct 28 that sanctions against Iran were unlikely in the near future, though Medvedev himself had said previously they could not be ruled out. The IAEA chief has said compromise proposals were being explored, including the possibility of storing the Iranian uranium in a third country, which could be a friendly country to Iran. But an Iranian official on Saturday dismissed the idea. Iran will not send its enriched uranium to any country, ISNA quoted the official as saying without giving his name. The official accused IAEA chief Mohamed ElBaradei of publicly floating an idea that had already been rejected because Iranian President Mahmoud Ahmadinejad on Sunday heads to Turkey, the third country which had originally been mooted.