Iran 'starts enriching nuclear fuel to 20%' at Natanz
Western powers have urged further sanctions over Iran's nuclear activity
Iran has started the process of enriching uranium to 20% in defiance of the West, Iranian state media says.
It said the process, which experts estimate would take about a year, began at the Natanz plant in the presence of international inspectors.
The move came as Western powers stepped up pressure on Iran, with the US saying it wanted UN sanctions within "weeks".
China, a UN Security Council member, called for further talks over Iran's nuclear programme.
The US and its western allies say Iran is trying to develop a nuclear weapon - a charge Iran denies.
Iran's top nuclear official, Ali Akbar Salehi, was quoted by state news agency Irna as saying Iran "had started the 20% enrichment in a separate cascade in Natanz" for use in a Tehran research reactor.
He said the cascade contained 164 centrifuges and had a production capacity of 3-5kg (6-11lb) a month - more than the 1.5kg (3.3lb) needed for the research reactor.
Jon Leyne, BBC News
Technically, anything up to 20% enrichment still qualifies as low-enriched uranium. So Iran could argue that it is still keeping within the letter of the law.
But the fear is that this move brings Iran closer to the capability to make a nuclear bomb. Experts say that once Iran has a stockpile of 20% enriched uranium, it could take as little as six months to convert it to weapons grade.
It's hotly disputed whether Iran has yet made a conscious decision to make a bomb. But as it builds up, at least the capability, the situation becomes increasingly dangerous.
As international pressure grows on Iran, there will surely be those within the Islamic Republic who will argue that Tehran should build a bomb - if only to protect against an attack designed to prevent just such a danger.
A spokesman for the International Atomic Energy Agency (IAEA) confirmed that its inspectors were at Natanz on Tuesday, but said that they were not expected to report on activities there until next week.
The BBC's Jon Leyne says Tuesday's announcement is designed to stress Iran's view that it is only acting within its rights.
Iran currently enriches uranium to a level of 3.5% but requires 20% enriched uranium for its research reactor, which is meant to produce medical isotopes. A bomb would require uranium enriched to at least 90%.
Enriching to 20% would take about one year, using the 2,000 centrifuges at the underground Natanz facility, experts say.
But moving from 20% to 90% would take only six months and only require between 500 and 1,000 centrifuges.
Asked if Iran was capable of enriching uranium to 20% and processing it as fuel, Mr Salehi told state news agency Isna: "We have the technical knowledge for this task. However, since it is our first experience we will move more cautiously."
Iran insists its nuclear programme is entirely peaceful and designed to provide civilian power.
It had already announced on Sunday that it aimed to start producing uranium enriched to 20% for its Tehran reactor.
Pressure for sanctions
Mr Salehi also said the government would build 10 new enrichment plants next year, despite the fact that it still had problems with its first one.
Benjamin Netanyahu: "This means crippling sanctions... applied right now"
The US and France reacted by saying that the time had come "for the adoption of strong sanctions", while the British government described Iran's new position as deeply worrying.
Pentagon spokesman Geoff Morrell said on Tuesday that US Defense Secretary Robert Gates wanted to see UN sanctions against Iran in "weeks, not months", and that Mr Gates "clearly thinks time is of the essence".
The UN Security Council has already imposed three rounds of sanctions against Iran in an effort to make it cease all uranium enrichment activities and heavy-water projects, which could produce plutonium suitable for use in weapons.
Chinese Foreign Ministry spokesman Ma Zhaoxu refused to comment directly on sanctions at a press conference on Tuesday, the Associated Press news agency reported.
"I hope the relevant parties will step up efforts and push for progress in the dialogue and negotiations," he was quoted as saying.
Iran says it is increasing uranium enrichment from 3.5% needed for commercial nuclear reactors
Says it will enrich to 20%, needed for a research reactor near Tehran
Weapons-grade uranium is at least 90% enriched
Experts say achieving 20% is a key step towards weapons grade
As a UN Security Council member, China's support would be needed for any new round of sanctions against Iran.
Russia, another Security Council member which has been uncertain over backing new sanctions, signalled its disapproval of Iran's move.
"Actions such as starting to enrich low-enriched uranium up to 20% raise doubts in other countries and these doubts are fairly well-grounded," Nikolai Patrushev, head of Russia's security council, was quoted as saying.
"Political-diplomatic methods are important for a resolution, but there is a limit to everything," he said.
Israeli Prime Minister Benjamin Netanyahu appealed for "tough action" from the international community.
"This means crippling sanctions and these sanctions must be applied right now," he said.
In October, a deal brokered by the IAEA was thought to have been struck for Iran to send its uranium to Russia and France for enrichment.
But last month, diplomats said Iran had told the IAEA that it did not accept the terms of the deal - though there have since been other, conflicting messages.
Mr Salehi has said that enriched uranium production would be halted if Iran received fuel enriched to 20% from abroad.
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