Foreign Minister Manouchehr Mottaki was responding to remarks made on Wednesday by U.S. Secretary of State Condoleezza Rice, suggesting Washington would join multilateral talks once Iran shut down its enrichment programs.

"If they want a change in the current status, they should change their mind and apply a logical behaviour toward the issues," Mottaki said, according to Iran state-run television.

The comments by Rice, echoed later by U.S. President George W. Bush, were hailed as a major shift in U.S. policy toward Iran, which had so far insisted on holding direct talks with Iran on its own.

"Our message to the Iranians is that, one, you won't have a weapon, and two, that you must verifiably suspend any programs, at which point we will come to the negotiating table to work on a way forward," President George W. Bush said Wednesday in responding to a reporter's question.

"I thought it was important for the United States to take the lead - along with our partners," Bush said. "And that's what you're seeing. You're seeing robust diplomacy. I believe this problem can be solved diplomatically and I'm going to give it every effort to do so."

The White House said Britain, France and Germany would be part of the multilateral talks.

Rice is to meet with representatives from those countries on Thursday in Vienna to finalize a package of incentives and threats to be presented to Iran.

Rice said at the State Department that the U.S. will begin negotiations with Iran as soon as it "fully and verifiably" suspends its enrichment activities.

"We urge Iran to make this choice for peace, to abandon its ambition for nuclear weapons," she said.

Iran maintains it is developing nuclear technology for power generation and insists it has the right to enrich uranium for those purposes.

Rice said that the United States has agreed with the EU over the "essential elements of a package" on Iran's nuclear issue. "Wehope that in the coming days the Iranian government will thoroughly consider this proposal," Rice said.

The EU has put forward a package of both incentives, including providing a light-water reactor to Iran, and possible penalties ifIran fails to cooperate.

Rice challenged the Iranian regime to make a fundamental choiceby either maintaining the current course, pursuing nuclear weapons,or altering the present course and cooperating in resolving the nuclear issue beginning by immediately resuming suspension of all enrichment-related and reprocessing activities.

Iran will "incur great costs" if it pursues nuclear weapons, Rice warned.

The Swiss ambassador to the United States has been asked to convey a copy of Rice's remarks to the Iranian side as the United States has no diplomatic relations with Iran.

However, White House spokesman Tony Snow said earlier Wednesdaythat the United States will not engage in one-on-one talks with Iran.

Nonetheless, this is seen as a clear policy shift by the Bush administration as it has repeatedly rejected calls to negotiate with Iran.

He named his cabinet on May 20 without the two key security posts after failing to reach a consensus deal among the main blocs -- the Shi'ites, minority Sunni Arabs, Kurds and secular parties -- who form his national unity government.

"We have reached a semi-closed road so I will go to the parliament with names of the candidates," said Maliki, who has vowed to rein in guerrilla and sectarian violence.

Maliki ordered the army onto Basra's streets on Wednesday, vowing to use an "iron fist" to show Iraqis he means business about tackling insecurity.

Basra, 550 km (340 miles) south of Baghdad, should be an early indication of whether he can back his words with action after previous Iraqi leaders failed to ease a raging Sunni insurgency and sectarian violence threatening vital oil exports.

Also on Thursday, a top U.S. commander ordered combat troops to be trained to abide by moral and ethical standards on the battlefield, an apparent response to allegations U.S. Marines killed civilians in a western Iraqi town last year.

In a case making waves in the United States, U.S. defense officials have said charges including murder may be brought against Marines following a U.S. investigation into the deaths of 24 civilian deaths in Haditha in November.

The training over the next 30 days in "core warrior values" would highlight "the importance of adhering to legal, moral and ethical standards on the battlefield," a statement said.

Lieutenant General Peter W. Chiarelli said that of nearly 150,000 U.S.-led troops in the country "99.9 percent of them perform their jobs magnificently" every day.

"Unfortunately, there are a few individuals who sometimes choose the wrong path," he said in the statement.

It did not mention events in Haditha, which some commentators are comparing to the 1968 My Lai massacre in Vietnam that helped turn many Americans against that war.

BASRA CRACKDOWN

In Basra some residents said security forces faced a complex network of gangs and assassins that includes Saddam Hussein loyalists and warring Shi'ite militias who thrive in the bloody chaos of an oil city that provides much of Iraq's income.

"There are Baathist looting gangs. There are militias. There are even some tribes who come and occupy police stations," said Saleem Abdullah, 27, a graduate student.

Checkpoints have popped up across Basra, with the police in the city center and army units on the outskirts inspecting every car that passes by, witnesses said.

"There will be constant patrols. We have orders to pull over cars with shaded windows. Unauthorized weapons will be taken," said police captain Ali Jassem.

Although the southern mainly Shi'ite region where British forces are based has been much quieter than Sunni Arab areas patrolled by Americans further north, Basra has become far more dangerous in recent months.

Lt.-Gen. Peter Chiarelli, commander of Multinational Corps Iraq, said in a statement that the training would emphasize "professional military values and the importance of disciplined, professional conduct in combat" as well as Iraqi cultural expectations.

"As military professionals, it is important that we take time to reflect on the values that separate us from our enemies," Chiarelli said. "The challenge for us is to make sure the actions of a few do not tarnish the good work of the many."

The training will be conducted in units over the next 30 days and was aimed at reinforcing training service members received prior to their deployment, according to the statement.

It order was issued about a week after the U.S. Marine Commandant, Gen. Michael Hagee, travelled to Iraq and cautioned troops on the danger of becoming "indifferent to the loss of a human life," following allegations that Marines in Iraq murdered civilians.

Western countries cut off direct aid to the Palestinian Authority after the militant Islamist group Hamas, which is sworn to destroy Israel but has largely abided by a truce for over a year, took over the government following elections in January.

The aid freeze has left the Palestinian Authority unable to pay salaries of 165,000 government workers, and has resulted in shortages of basic necessities including medical supplies.

"We have been compelled to revise our original appeal in the face of desperate need. It is particularly aimed at assisting the most vulnerable Palestinians, including children who make up half the population," said David Shearer, head of the UN office for the Coordination of Humanitarian Affairs.

The U.N. agency for Palestinian refugees, UNRWA, cited a 600 percent increase in applications for short-term, U.N.-sponsored jobs in the West Bank. The program's Gaza waiting-list now tops 100,000 people.

Shearer said the World Food Program had also warned the international community that more Palestinians were unable to meet their daily food needs.

Western powers have called on Hamas to recognize Israel, renounce violence and abide by existing peace agreements if it wants contacts or aid to resume. Hamas has so far refused.

Hamad also clarified that the truce would be from five to 10 years, if Israel withdraws from territories it captured in the 1967 War, including the West Bank, the Gaza Strip and East Jerusalem.

Hamad's remarks came as Hamas is facing an ultimatum issued by President Mahmoud Abbas, who would order a referendum within 40 days if Hamas and other factions fail to agree to a proposal made by Palestinian prisoners earlier this month.

Abbas announced on May 25 that he would give Hamas 10 days to decide whether to agree to the proposal, which calls for the establishment of an independent Palestinian state on the territories occupied by Israel since the 1967 war.

The proposal was widely seen as an implicit recognition of Israel, a stance against Hamas' political charter. Commenting on Israeli Prime Minister Ehud Olmert's plan to unilaterally withdraw from the West Bank, Hamad did not oppose. "If Israel wants to withdraw from the West Bank, then it can," said Hamad.

Yasser Abed Rabou, a member of the Palestine Liberation Organization (PLO) executive committees, slammed Hamad for supporting the West Bank withdrawal.

"Leaving West Bank means redrawing its map in a way that allows isolating its cities from each others and annexing Jerusalem and other parts to Israel," Abed Rabou told Voice of Palestine.

Abed Rabou called for solving the Palestinian-Israeli conflict through negotiations based on relevant International resolutions. Hamas is now under pressure to moderate its stance toward Israel so as to survive the current economic and diplomatic crisis plaguing the Palestinians.

Israel has pulled out from the Gaza Strip last September, ending 38 years occupation there.

Olmert, who vowed to set Israel's final border in 2010, plans to carry out further unilateral withdrawal from isolated West Bank settlements but to hold onto larger ones even without talks with the Palestinian side.

According to Olmert's assessment, the international support and recognition that Israel is likely to receive in return for a major move will be greater than what can be expected from a series of smaller steps, it added.

Under the plan, Olmert intends to demarcate Israel's final borders with the Palestinians by 2010 by evacuating isolated settlements in the West Bank while keeping the major ones with or without peace talks with the Palestinian side.

Prior to his visit to the United States in late May, Olmert rejected a detailed proposal put forward by Vice Premier Shimon Peres, in which the convergence plan will be carried out in six stages.

According to Peres' proposal, the first stage includes the evacuation of two small settlements with small populations in the northern West Bank.

This will allow Israel to leave a relatively large area to Palestinian control but at the same time enjoy significant international support, said Peres.

The Israeli government has not formally discussed the speed of the withdrawals, but the issue is at the center of planning in the cabinet, Ha'aretz reported.

Olmert has been a staunch supporter to the Israeli pullout of the Gaza Strip and four settlements in the northern West Bank last summer, an unprecedented move that won world applause.

Olmert is scheduled to meet with leaders of Egypt, Jordan,Britain, France and Germany later this month in an effort to win support to his convergence plan.

The army has been pounding northern Gaza with artillery and has carried out a series of air raids in recent weeks in order to put a permanent end to the firing of the notoriously inaccurate missiles.

Several missiles were fired in the latest air strike on Wednesday over a disused training base for another militant group, the Popular Resistance Committees, although there were no reports of casualties in an area to the south of Gaza City.

On Tuesday, the army confirmed for the first time since it left Gaza last September after a 38-year occupation that ground troops had been sent into the territory.

Four Palestinians, including three members of Jihad, were killed when they were ambushed by the undercover unit as they prepared to launch rockets towards the southern Israeli city of Ashkelon.

Army chiefs have previously expressed reservations about re-entering Gaza but the continuing rocket attacks have led to a hardening of attitudes in the defence establishment.

Speaking on a tour of his home town after the missile attacks, Peretz said he was determined to bring the militant groups to heel as he described how he was awakened by the sound of the town's early warning alarm system.

"The sirens went off 10 minutes before I woke up, followed by the sound of a large explosion," said Peretz.

"We will find the ways and means to make it impossible for these organisations to fire towards Sderot and other communities.

"I very much hope that the (Palestinian) population understands that these organisations are provoking a catastrophe for them."

General Yoav Galant, head of the army's southern commmand, said recent ground operations had yielded results and would continue.

"IDF operations have reduced the level of attacks," he said while accompanying Peretz on the tour of Sderot.

"We have seen in the last few days the targeting (of militants) from the air and contacts on the ground.

"I can assure you that all these kinds of operations will continue."

A report in Tuesday's Haaretz daily, which quoted senior officers, said more ground operations involving special forces would be carried out to stop the rocket attacks.

The officers said the effectiveness of such operations had been proven and that international reaction to the return of troops on the ground in Gaza had been fairly understanding.

Haaretz said small units of special forces had been operating in Gaza for the past two months but the army only decided to go public with Tuesday's operation as the death of the four Jihad militants made it impossible to hide.

For his part, chief of staff Dan Halutz said the campaign against the militants behind the rocket attacks would intensify.

"We are going to find ways to hit even harder against those who fire rockets," General Halutz told army radio.