The United Nations' nuclear watchdog believes Iran has failed to comply with its obligations on storing and processing nuclear material.
Ties between the IAEA and Iran have been good until now
A report by the International Atomic Energy Agency (IAEA) says Tehran has broken an agreement to report proscribed nuclear activities - but adds that it is taking steps to rectify this.
The report was released to news agencies on Friday ahead of a meeting of the IAEA's board of governors on the issue later this month.
Iran, which the United States has described as part of an "axis of evil", denied it was breaking any agreements
and said it could answer every point made in the report.
"We have done nothing which would violate our commitments
regarding the NPT [Nuclear Non-Proliferation Treaty],"
said foreign ministry spokesman Hamid Reza Assefi.
The number of failures by Iran to report the
material, facilities and activities in question in a timely
manner... is a matter of concern
"We have answers for all the points mentioned
in this news."
Iran insists it wants to use nuclear energy only for peaceful purposes and denies allegations that it is developing nuclear weapons.
It has so far refused to sign agreements that would allow tougher international inspections of its nuclear facilities.
The IAEA report accuses Iran of failing to meet its obligations to:
account for nuclear material
report its subsequent processing and use
declare facilities where the material is stored and processed
The report notes that the quantities of nuclear material involved have "not been large" but says that Iran's failures to report back were a "matter of concern".
First nuclear plant comes online by summer 2004
Has signed up to the
Nuclear Weapons Non-Proliferation Treaty
Can now supply its own power stations with nuclear fuel
Last Sunday, Russia - Iran's main partner in its nuclear power programme - added its voice to those calling on Tehran to sign an additional protocol to the NPT.
That would permit tougher international inspections, giving the Iranians a chance to prove they are not trying to produce nuclear weapons.
But Iran refused to agree to this, before international sanctions are lifted and the country is given the technology to develop atomic energy for peaceful purposes.
Washington hopes the IAEA will turn up the heat on Iran when its 35-member board meets after 16 June by signalling grave doubts that its network of nuclear facilities is merely designed for power generation.