Tehran: Iran`s atomic chief Ali Akbar Salehi announced on Tuesday that Tehran has started to produce 20 percent enriched uranium at its Natanz plant, the official IRNA news agency reported.
"From today we have started the 20 percent enrichment in a separate cascade in Natanz," Salehi said, quoted by IRNA.
Salehi said the separate cascade was "more on a lab scale".
"We have prepared a cascade of 164 centrifuges for this purpose. This can make between three to five kilogrammes (6.5 to 11 pounds) of 20 percent enriched uranium per month for Tehran reactor," he said.
Iran`s English language Press TV too reported that Tehran has commenced enriching uranium to 20 percent.
A senior Israeli minister called on Tuesday for the international community to adopt tough sanctions against Iran.
"The coming month is decisive," Silvan Shalom, Vice Premier, told public radio. "It is time the international community imposes tough sanctions against Iran, even if Russia and China do not go along."
"The international community must decide if it will continue to harbour illusions on the so-called Iranian cooperation or if it will impose real sanctions against Iran and its nuclear programme," said Shalom.
The United States and France said on Monday they will push for "strong" new UN anti-nuclear sanctions against Iran.
China, however, called Tuesday for continued talks on a deal.
"We hope the relevant parties will exchange views on the draft deal on the Tehran research reactor and reach common ground at an early date which will help solve the issue," Foreign Ministry spokesman Ma Zhaoxu said.
"I hope relevant parties will step up efforts to push forward dialogue on this question."
Western powers are trying to convince Iran to sign up to an IAEA-brokered deal that envisages Tehran being supplied with nuclear fuel for its Tehran research reactor in exchange for its low-enriched uranium (LEU).
The deal has hit a roadblock as Tehran, although saying it is ready "in principle" to sign on to it, insists that not all its LEU be shipped out in one go as world powers are demanding.
Foreign Ministry spokesman Ramin Mehmanparast on Tuesday left the door open for a deal, saying the stepped-up enrichment programme did not preclude a swap deal going ahead.
"Our preparation for 20 percent enrichment has got nothing to do with the swap. We are still ready for the swap if our requirements are met," he told reporters.
"If other countries or the IAEA meet our needs, maybe we can change our approach... the door is not closed yet. Anytime they (world powers) are ready, this (fuel deal) can be done."
Iran on Monday formally told the IAEA of its plan to produce high enriched uranium at Nantanz, sparking warnings by world powers of fresh sanctions against the Islamic republic.
Western powers led by Washington suspect Tehran is enriching uranium to make atomic weapons as the material in high purity form can be used in the fissile core of a nuclear bomb.
Iran insists its intentions are entirely peaceful and that it specifically wants to process uranium to the 20 percent level to fuel the Tehran research reactor, which makes medical isotopes.
A French presidency official said that President Nicolas Sarkozy and US Defence Secretary Robert Gates had in talks in Paris on Monday "agreed that the time has come for the adoption of strong sanctions (against Iran), in the hope that dialogue will be resumed."
Gates, whose aides said earlier the United States would ask France to submit a sanctions motion at the UN Security Council, which it currently chairs, said: "We are very much agreed that action by the international community is the next step."
In Washington, a US official said Iran`s high enrichment plan was "a provocative move in defiance of UN Security Council resolutions.
Neither the United States nor Israel has ruled out taking military action against Iran`s nuclear facilities.
IAEA chief Yukiya Amano "noted with concern this decision, as it may affect, in particular, ongoing international efforts to ensure the availability of nuclear fuel for the Tehran research reactor," his agency said.
Iran`s main enrichment facility is situated in the central city of Natanz where sensitive atomic work has continued for years despite three sets of UN sanctions.