Iran has started enriching small amounts of uranium gas at its underground plant at Natanz, according to the UN's nuclear agency, the IAEA.
Iran plans to build 50,000 centrifuges at Natanz
The agency said eight cascades of more than 1,300 centrifuges, the machines that spin uranium gas into enriched material, were now operating.
Earlier this month Iran's president said Natanz was ready to enrich uranium on an industrial-scale.
The West suspects Iran of seeking atomic weapons, a charge Iran denies.
Tehran insists its nuclear programme is for peaceful purposes only.
The UN Security Council has imposed sanctions on Teheran for its failure to scale back its nuclear programme.
Diplomatic sources have confirmed to the BBC the contents of what was a confidential letter from the International Atomic Energy Agency to Iranian officials.
TIMELINE: IRAN ENRICHMENT
2003: Enrichment programme that had been hidden for 18 years is uncovered by IAEA
Feb 2006: Iran reported to Security Council
5 Feb 2007: Diplomats confirm Iranian claims to have set up more than 300 centrifuges in two cascades
9 April: Iran claims to be enriching uranium on an "industrial scale". IAEA and Russian officials are sceptical
19 April: IAEA document confirms that Iran running more than 1,300 centrifuges in eight cascades
The document - a letter signed by IAEA deputy Director General Ollie Heinonen - said the Agency took note of the information provided by Iran that it is running more 1,300 centrifuges - the machines used to spin the gas into enriched uranium.
It said some UF6 uranium gas was being fed into the centrifuges. The disclosure of the inspectors' findings comes after the head of the IAEA, Mohammed ElBaradei, downplayed Iran's claim that it was beginning industrial-scale production.
Speaking in Saudi Arabia last week, Mr ElBaradei said Iran would need thousands of centrifuges, but had only hundreds operating at present.
He also said that Iran would not be able to produce the highly enriched uranium needed for a nuclear bomb as long as it remained under the supervision of IAEA inspectors.
Iran says it plans to install 50,000 centrifuges at the Natanz plant.