By Andrew Mills, Yasmine Ghania and Andrea Shalal

DUBAI/ATLANTA, Oct 31 (Reuters) - Iranian negotiators held talks in Doha with Qatari mediators on Saturday to discuss paths out of war in the Gulf, a source who was briefed on the negotiations told Reuters, as diplomats try to avert new fighting after the US midterm elections this week.

US Secretary of State Marco Rubio said on Saturday that President Donald Trump has not decided whether to launch new strikes against Iran, but would prefer to resolve the conflict diplomatically.

Trump has held off on strikes on Iran in recent weeks ahead of midterm elections that will determine whether his Republican Party will retain its thin majorities in both houses of the US Congress.

Saturday's talks in the Qatari capital followed more than 12 hours of discussions on Friday between Iranian and Qatari envoys in Tehran, said the source, who spoke on condition of anonymity. The source said the talks were being coordinated in regular contacts with Washington.

Countries in the region have been anticipating that Trump could restart attacks once the voting is over. Iran has repeatedly said it would respond to any new attacks by striking at US and Israeli targets in neighbouring countries.

Iran's Supreme Leader Ayatollah Mojtaba Khamenei issued a statement on Saturday ordering the armed forces to be prepared to respond to any attacks. The Iranian military later announced it was taking steps to improve its readiness.

"Any level or type of threat must be met with an immediate,impactful, and geographically unrestricted response," Khamenei said on Saturday in the statement posted on his official Telegram account. He has not appeared in public since replacing his father, who was slain at the war's outset.

Khamenei said senior commanders had reported high readiness along the Gulf coast, in and around the Strait of Hormuz and Gulf of Oman, and on Iran's northwestern and southeastern borders.

Iran's influential security chief Mohsen Rezaei said Tehran was debating whether to lift its longstanding ban on nuclear weapons should hostilities resume, although he said no such decision had been taken. There could be no talks on Iran's nuclear programme unless Washington accepted Iran's demands, he added.

Rubio, hosting foreign ministers of the G20 major economies in Atlanta, declined to set a timeframe for the talks in Qatar, but said direct and indirect contacts with Iran were under way.

"There are multiple talks. Talks have actually never stopped," he said.

Trump would "prefer to solve it diplomatically. But I think what the president expresses to you is incredible confidence that if we needed to do something militarily, we would have the ability to do it," Rubio said.

DIPLOMACY CONTINUES DESPITE GAPS

Trump, who launched the war alongside Israel in February, has repeatedly hinted at plans to restart strikes on Iran. Last week he called on Israelis ahead of their own election to keep his wartime ally Prime Minister Benjamin Netanyahu in power so the two leaders can "finish the job".

But Washington has also lately taken steps to indicate it is open to diplomacy. Earlier this week, Vice President JD Vance, who led the US delegation at previous rounds of talks with Iran, wrote a letter to the security chief Rezaei, which the New York Times and Wall Street Journal described as an initiative to see if it was possible to restart talks.

Trump has played the letter down, saying he approved it only to discuss the possibility of letting more medical supplies into Iran: "I said if you want to do that, that's ok. Basically, it's getting supplies in ​to help people that are not well."

In the latest Qatari-mediated discussions, the Qataris brought a proposal to Tehran a week ago for a seven-day plan, under which the US and Iran would take daily steps to build trust ahead of broader peace talks, the source briefed on the negotiations said. A senior Iranian official told Reuters on Friday that this proposal was not deemed satisfactory by Tehran.

Iran has been proposing its own seven-day plan since September, so far rejected by Trump. That calls for Washington to lift a blockade of Iranian ports, unfreeze assets and approve an Iranian-backed route through the Strait of Hormuz, after which the contested strait would be reopened.

Foreign Minister Abbas Araqchi said in remarks reported by Al Jazeera on Saturday that Iran was studying Vance's letter. He said the Iranian plan was the only proposal on the table to reopen the strait.

(Reporting by Andrew Mills, Enas Alashray and Yasmine Ghania, Writing by Andrew Mills and Peter Graff; Editing by Peter Graff. Jan Harvey and David Gregorio)