TEHRAN, Jan 25: Iran will not restore diplomatic ties with the United States until there has been a "fundamental change" in its policies towards the Islamic republic, President Mohammad Khatami said on Sunday.

"If we witness a fundamental change in American policies, a new situation will prevail," Khatami said after a reception for visiting Austrian President Thomas Klestil. "We have no enmity towards anyone but we also expect that others do not make enmity towards us," the official IRNA news agency quoted the president as saying.

On Saturday, US Vice President Dick Cheney urged Iran's Islamic regime to bow to its people's demands for democracy and live up to its commitments not to develop nuclear weapons.

Speaking to the World Economic Forum, Cheney called on Iran's conservatives, locked in a dispute with the reformist government over the eligibility of thousands of candidates for next month's parliamentary elections, to "follow the example" of other Middle East states seeking democratic reform.

"We call for the Iranian regime to honour the legitimate demands of the Iranian people," Cheney said. "There are growing calls for true democracy and human rights."

Washington has had no diplomatic relations with Iran since US embassy staff were held hostage for 444 days following the 1979 Islamic revolution. Shortly after the September 11, 2001 attacks in the United States, President George W. Bush declared Iran, along with North Korea and Saddam Hussein's Iraq, part of an "axis of evil" for their alleged support of international terrorism. However, late last year, Bush temporarily waived US sanctions against Iran to allow aid to be sent following a devastating earthquake in Bam.-AFP