A fresh round of talks between Iran and world powers kicks off in Geneva Thursday amid guarded hopes a deal may finally be possible in the standoff over Tehran's nuclear programme.

In their second meeting here in less than a month, negotiators from the United States and five other world powers will sit down with Iranian officials for two days in the hopes of hammering out a framework agreement.

Officials have said the contours of the "first step" of a deal are emerging, with world powers offering a limited easing of sanctions in exchange for Iran freezing its most controversial nuclear efforts.

Both sides have said recent talks have been the most productive in years but admit that reaching a deal will not be easy.

Iranian Foreign Minister Mohammad Javad Zarif said Thursday the talks were expected to be "very difficult".

"We have entered a detailed phase that is still difficult and precise," Zarif said on his Facebook page.

Zarif had sounded an optimistic note earlier this week however, saying he believed it would be "possible" to reach an agreement this week.

The meeting is the second since President Hassan Rouhani took office in August pledging to resolve the nuclear dispute and lift sanctions by engaging with world powers.

Iran is anxious for relief from crippling economic sanctions that have cut oil revenues in half, caused the value of the rial to plunge and pushed inflation above 40 percent.

The West is also keen to seize a rare opportunity to build bridges with Iran after decades of hostility, opening the door to engaging with Tehran on other issues like the conflict in Syria, where Iran has backed President Bashar al-Assad against the anti-regime insurgents.

Last month's talks in Geneva -- held in English for the first time -- saw Iran reportedly outline a two-stage process that would resolve the dispute within a year.

'Limited, targeted and reversible sanctions relief'

Speaking to journalists in Geneva on the eve of this week's talks, a senior US official said Washington is willing to offer Iran limited sanctions relief if it agrees to take a "first step" to stop advancing its nuclear programme.

"What we're looking for now is a first phase, a first step, an initial understanding that stops Iran's nuclear programme from moving forward... and that potentially rolls some of it back," said the official.

"We are prepared to offer limited, targeted and reversible sanctions relief. We are not talking about touching the core architecture of the Iranian sanctions regime in this first step," the official said.

The official refused to give details of the offers on the table, but said the first stage would "put time on the clock" to negotiate a final agreement.

World powers are represented at the talks by the so-called P5+1, the five permanent members of the UN Security Council -- Britain, China, France, Russia and the United States -- plus Germany.

The group has held years of talks with Tehran on its uranium enrichment, which Western powers suspect may be aimed at developing nuclear weapons.

Iran has repeatedly denied this, insisting its nuclear programme is only for generating electricity and for medical purposes.

The six powers have been pushing Iran to freeze its enrichment efforts, reduce stockpiles and lower its capacity to produce nuclear material.

Even if negotiators can reach a deal, both sides will have to overcome deep scepticism among hardliners opposed to any compromise.

Israel, widely believed to be the Middle East's sole if undeclared nuclear power, has staunchly opposed easing sanctions and its supporters in the US Congress could come out against even marginal concessions to Iran.

Ahead of Thursday's talks, Israel urged world powers to reject what it said was an Iranian offer to partly cut back its nuclear programme in return for a reduction of sanctions.

"Israel in the last few hours has learned that a proposal will be brought before the P5+1 in Geneva in which Iran will cease all enrichment at 20 percent and slow down work on the heavy water reactor in Arak, and will receive in return the easing of sanctions," an official told AFP on condition of anonymity.

"Israel thinks this is a bad deal and will oppose it strongly," the official said.

Iran's enrichment of uranium to 20 percent has been a particular source of concern as it is seen as a key step on the way to the 90 percent level required for a nuclear weapon.

The heavy water reactor under construction at Arak is also a source of worry as it would provide a source of plutonium, an alternative route to a nuclear warhead.

Iran's tortuous nuclear standoff with the West
Geneva (AFP) Nov 07, 2013 - Iran's nuclear stand-off with the West has dragged on for a decade, but there are glimmers of hope after Iran presented a closely-guarded proposal at talks in Geneva last month.

That paved the way for a fresh meeting in the Swiss city on Thursday and Friday.

Here is an overview of the issues:

INTERNATIONAL DEMANDS

The P5+1 group -- UN Security Council permanent members the United States, Britain, France, China and Russia plus non-member Germany -- has pushed for concessions from Iran amid suspicion that it is developing nuclear weapon capability, an allegation Tehran denies. The demanded concessions are:

-- To dismantle the Fordo underground uranium enrichment facility, which has nearly 3,000 centrifuges installed and is dug deep into a mountain near the holy city of Qom, some 150 kilometres (90 miles) south of Tehran.

-- To suspend uranium enrichment. Successive UN resolutions call for an end to all uranium enrichment, but the P5+1 is understood to be willing to accept a compromise under which Iran would cease its 20-percent uranium enrichment, which international powers consider dangerously close to a weapons-grade capability. Under that model, enrichment of up to five percent would be permitted for civilian nuclear purposes, though stocks would be limited.

-- To treat the country's remaining 20-percent enriched uranium and change it into combustible material, which then would require weeks of processing to convert back into gaseous form able to be enriched further.

Lead US negotiator Wendy Sherman last weekend defined "progress" as stopping the nuclear programme from advancing further while negotiators try to reach a comprehensive agreement.

She said Washington was prepared to offer "very limited, temporary, reversible sanctions relief" while maintaining the "fundamental architecture of the oil and banking sanctions -- which we will need for a comprehensive agreement, not for a first step".

IRAN'S STANCE

Under Iran's former president, hardliner Mahmoud Ahmadinejad, talks with the P5+1 in Kazakhstan in February and May hit the wall as Tehran rejected the world powers' demands outright.

But the tone has changed since reputed moderate Hassan Rouhani won office in June, pledging to resolve the nuclear dispute and lift international sanctions through constructive engagement.

The proposal Rouhani's negotiators put on the table has been kept secret. But according to Iranian officials, it envisages a first and a last step which Tehran hopes can be implemented within three months and a year respectively.

Iran argues that it will need to see a gradual easing of sanctions along the way, given that both sides should give ground, but officials have said Fordo is a "red line".

The site, built in secret and whose existence was revealed in 2009, began in late 2011 to enrich uranium to 20 percent, most of the way in a technical process to the 90-percent level needed for a nuclear weapon.

Iran says it is enriching to this level to provide fuel for the Tehran Research Reactor, which produces medical isotopes, and denies seeking or ever having sought nuclear weapons.

TIGHTER INSPECTION

The P5+1 are also seeking a tighter inspection regime under which officials from the UN nuclear agency IAEA can have quicker access to all Iran's declared nuclear sites. They also want to be able to go to non-nuclear facilities suspected of being associated with the nuclear programme, such as a military base in Parchin thought to have hosted nuclear warhead design experments, and to access a heavy-water plant at Arak that was formally opened in 2006.

Currently, Iran is only obliged to inform the IAEA three months ahead of transferring fissile material into the nuclear site.

THREAT OF NEW SANCTIONS

Draft legislation for new American sanctions targeting Iran's automobile sector and foreign reserves was adopted in July by the US House of Representatives.

But the US Senate said it would freeze the implementation of the sanctions if Tehran immediately halted uranium enrichment. The White House is trying to persuade them to hold off new sanctions, at least for now.

Israel, the Middle East's sole if undeclared nuclear-armed power, has warned against a partial deal which could see the easing of sanctions, and refuses to rule out military strikes against Iran.

It wants Iran to meet four conditions before sanctions are eased: halt enrichment, remove all enriched uranium from its territory, close Fordo and stop construction of a plutonium reactor.