By Paul Reynolds
World affairs correspondent, BBC News website
The existence of Natanz was revealed by exiled groups
The announcement of a second uranium enrichment site has spurred US efforts to increase sanctions on Iran.
The site - said to be near Qom - was acknowledged by Iran in a letter to the International Atomic Energy Agency (IAEA) on Monday. Western intelligence agencies discovered the site some time ago, according to the New York Times.
In its letter to the IAEA, Iran sought to downplay the site's importance, saying that it was a pilot plant still under construction.
The problem for Iran is that this will increase the suspicions many governments have about its secrecy and its intentions. Some fear that Iran is developing at least a nuclear-weapon capacity, with a view to making a bomb one day. Iran says it is against nuclear weapons and is simply making fuel for nuclear power.
President Ahmadinejad countered accusations by saying that the plant is open for IAEA inspection and that it had been declared well in advance of the 180 days notice required.
However, there is a dispute about the amount of notice that Iran should give the IAEA before a new nuclear facility becomes operational. The IAEA says that in 2003, after Iran's main enrichment plant at Natanz was discovered, Iran agreed on what is called a Subsidiary Arrangement, under which it is required to tell the IAEA, not at 180 days, but earlier, at the preliminary design stage. Iran later announced that it had repudiated this agreement as it had not been ratified by its parliament, but the IAEA says that no such unilateral repudiation is allowed.
Iranian ambitions for this site are not known. It could be, as their chief nuclear negotiator has implied, that they wanted a back-up in case their main plant at Natanz was attacked. But another fear is that they intended to enrich uranium more highly at the secret plant, to a level suitable for a nuclear explosion.
President Obama took the latter position. He said that its size and scope was "inconsistent" with a peaceful programme.
Mark Fitzpatrick of the International Institute for International Affairs said the 3,000 centrifuges estimated to be at the plant would not be enough to make any nuclear fuel but could be used to enrich enough uranium to the higher level needed for a nuclear explosion.
He said that Iran did appear to be in violation of its IAEA safeguards agreement.
"Common sense also dictates that at this time Iran would have been open if it had nothing to hide," he added. "This shows it is far from being on the up-and-up."
It is not clear whether Iran sent the letter because it felt obliged to, or because it got wind that the plant had been discovered. The timing could not have been worse for Iran. The Americans and their allies certainly capitalised on the admission at a time when they were rallying support for further sanctions.
The discovery has certainly strengthened the US demands for further sanctions to be imposed unless Iran suspends all enrichment, as required by the Security Council.
This might help explain why this week Russia appeared to soften its opposition to further sanctions.
The US wants Iran's oil and gas industries to be targeted. Current Security Council sanctions aim principally at its nuclear and ballistic missile work.
President Obama was also careful to repeat the offer of assistance for Iran if it freezes enrichment and enters a dialogue, leaving the door open for talks which will held in Geneva on 1 October.
The situation has echoes of how Iran's main enrichment plant at Natanz was found. Iran kept that site secret for 18 years until Iranian exiles revealed it in 2002. Iran then had to acknowledge it and it came under IAEA inspection in 2003.
The IAEA says that Iran has not diverted for nuclear weapons purposes the low-enriched uranium the plant has been producing. Iran say this fuel is for nuclear power.