A senior Iranian lawmaker said Sunday that nuclear fuel swap for Iran's research reactor must take place in Iranian territory, the official IRNA news agency reported.

"Iran's stance that the (nuclear) fuel swap must take place in Iranian territory will not change," head of Parliament's Commission of National Security and Foreign Policy, Alaeddin Boroujerdi, told IRNA.

Boroujerdi rejected the allegations raised by western media and officials that Iran is ready to swap uranium in a third country, according to the report.

"The west had better find a way out of the current stalemate rather than raising hue and cry in vain," he was quoted as saying.

Tehran rejected a December 31 deadline set by the United States for Iran to accept a deal of swapping its low-enriched uranium for nuclear fuel outside Iran.

Under a draft deal brokered by the UN nuclear watchdog, most of Iran's existing low-grade enriched uranium should be shipped to Russia and France by the end of the year, where it would be processed into fuel rods with the purity of 20 percent.

The higher-level enriched uranium will be transported back to Iran to be used in a research reactor in Tehran for the manufacture of medical radioisotopes, according to the draft.

"Tehran reactor can produce medicine for 800,000 people, the parties engaged in negotiation with Iran to supply 20 percent fuel are advised to stop procrastination. Otherwise, Iran will launch 20 percent enrichment," IRNA quoted Boroujerdi as saying.

The United States and its Western allies have been accusing Iran of secretly developing nuclear weapons under the disguise of civilian nuclear power. Iran has denied the accusation and stressed its nuclear program is only for peaceful purposes.