The official said that an offer in this regard was made by the US, which Iranian officials turned down saying it was "too complicated" for them at this point of time.
"We did not have any plan for a formal bilateral meeting here. We indicated that the two leaders could have had a discussion on the margins if the opportunity presented itself.
However, US would continue with its direct talks with Iran through the Secretary of State John Kerry as announced by Obama in his address to the UN General Assembly yesterday.
"I am directing John Kerry to pursue this effort with the Iranian government in close cooperation with the European Union, the United Kingdom, France, Germany, Russia and China," the President said.
The official cited "complicated dynamics in Iran" surrounding the relationship with the US as reason for the Iranians to turn down the offer and clarified that there was no proposal for a bilateral between the two president.
"We had discussions at a working level with them and ultimately it became clear that that was too complicated for them at this time," the official said.
"This was not a formal offer that then came back because it's too complicated. This was a some conversations that were taking place about the possibility of an informal, brief encounter," the senior administration official said.
There had been signs that the US and Iran would have the highest diplomatic contact since before Iran's 1979 Islamic revolution to try to settle Tehran's nuclear issue.
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