UPDATE 1-Lula urges Iran dialogue, backs nuclear plan

* Iran says open to accord but that West lacks will

* Lula defends Ahmadinejad visit, seeks mediation (Recasts, adds Lula, Ahmadinejad quotes)

By Raymond Colitt and Fernando Exman

BRASILIA, Nov 23 (Reuters) - Brazilian President Luiz Inacio Lula da Silva urged his Iranian counterpart on Monday to engage in dialogue on nuclear non-proliferation but backed Iran's right to develop a peaceful nuclear program.

Ignoring critics who fear closer ties with Iran could dent Brazil's ambitions on the global diplomatic stage, Lula met with Mahmoud Ahmadinejad in Brasilia on the first leg of the Iranian leader's South American tour, which also includes stops in Bolivia and Venezuela.

Iran is under international pressure to accept a deal that would allow it to send enriched uranium abroad to be rendered into fuel that would be returned for use in medical facilities in Tehran. Lula offered support for Ahmadinejad while also nudging him to pursue dialogue with the West.

"We recognize Iran's right to develop a peaceful nuclear program in compliance with international accords," Lula said in a prepared speech at a news conference with Ahmadinejad.

The Brazilian leader then turned to his guest and said: "I encourage you to continue engaging interested countries to seek a just and balanced solution on the Iranian nuclear issue."

Western powers agree that Iran has the right to develop a civilian nuclear program, but want restrictions to prevent Tehran from developing a nuclear weapon and say it has been caught building nuclear facilities in secret. Iran insists its program is for civilian purposes only.