State news agency IRNA, citing a well-informed source, reported that Supreme National Security Council head Hassan Rowhani had "presented his resignation to President Mohammad Khatami".

However Ali Agha Mohammadi, spokesman for the council, immediately told AFP the announcement was "totally false".

"A resignation now would make absolutely no sense and even today Mr Rowhani had very advanced discussions with Mr Ahmadinejad," he added.

The uncertainty over Rowhani's future comes less than two weeks after the ultra-conservative Ahmadinejad was elected president, thrashing rival candidate Akbar Hashemi Rafsanjani, a close ally of Rowhani and moderating influence on nuclear policy.

It also comes at a delicate phase in negotiations between Iran and the European Union that are aimed at persuading Tehran to give guarantees its nuclear programme is peaceful in exchange for a wide-ranging cooperation deal.

Rowhani has been in charge of the nuclear portfolio since October 2003 and has succeeded in keeping talks alive despite threats by the United States to take Iran to the UN Security Council and several moments when the process verged on collapse.

Rumours over his future have been circulating for several days after an election campaign where he made no attempt to hide his support for Rafsanjani and even spoken darkly of threats hanging over the revolution.

While Ahmadinejad and Rowhani may share the same hometown -- Semnan to the east of Tehran -- they could not be more different.

Rowhani, 57, has in past years emphasised his moderation, saying the state should not worry what people do at home and expressing hope that Tehran could reopen dialogue one day with Washington.

The good-humoured personality of the white-bearded cleric has become appreciated in European capitals during the precarious negotiations on the nuclear programme.

"Rowhani's departure would be a very bad signal," said a top European diplomat close to the negotiations.

Ahmadinejad's landslide victory has worried European countries, who fear Iran could one day decide to resume its sensitive uranium enrichment activities, frozen for the course of the negotiations.

The president-elect lashed out at Iran's nuclear negotiators in the election campaign, saying they were "terrified" before they even got to the negotiating table.

However he has since moved to stake out more moderate territory, saying that Iran's nuclear programme will be peaceful and vowing to press on with the nuclear talks.

Mohammadi told the student agency ISNA the rumours about Rowhani's departure were aimed at "weakening the future government by alleging that Rowhani does not want to work with Ahmadinejad", who is due to take office on August 3.

"Mr Rowhani will stay in place right up until the end of the mandate" of the outgoing pro-reform President Khatami. Thereafter, the decision is "in the hands of Mr Ahmadinejad."

According to a confidante, who declined to be named, Rowhani "has not resigned but does not seem ready to work with the new government. It is unlikely his policy would be in line with that of the new government."

The talks with Europe will be entering a critical phase, with Iran expecting concrete proposals on the nuclear cooperation deal from Britain, France and Germany by the end of this month.

Foreign ministry spokesman Hamid Reza Asefi reaffirmed Tehran's consistent position that if the proposals "do not recognise Iran's right to enrichment, Iran will reject them".

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