The announcement sent alarm bells ringing in the West, with Russia saying it cast doubt on Iran's nuclear intentions while the US said it added urgency to its efforts to clinch new sanctions against the Islamic republic.

"From today we have started the 20 percent enrichment ... in Natanz," Iran's atomic chief Ali Akbar Salehi told the official IRNA news agency.

Experts say once Iran has enriched uranium to the 20 percent level, it can then carry on to the 93 percent level needed to produce nuclear weapons as the technology is the same.

Iran's long-time ally Russia said the announcement raised "doubts" about the Islamic republic's nuclear intentions.

"Iran claims it is not trying to acquire nuclear weapons," Russian news agencies quoted Nikolai Patrushev, secretary of the Russian national security council, as saying.

"But actions such as starting to enrich low-enriched uranium up to 20 percent raise doubts in other countries and these doubts are fairly well-grounded," Patrushev added.

In Paris, Pentagon spokesman Geoff Morrell said US Defence Secretary Robert Gates, who was winding up a visit to France, said Washington is now aiming for a fresh UN sanctions resolution against Iran in "a matter of weeks, not months."

"(Gates) thinks that we need it and that we can do it in that time," Morrell added. "In all his meetings he discussed this sense of urgency."

Israeli Prime Minister Benjamin Netanyahu added to the clamour, calling for immediate "crippling sanctions" against arch-foe Iran.

The UN nuclear watchdog said a team of its inspectors was in place to monitor the stepped-up enrichment work.

"I can confirm that officials are there in Natanz today," said a spokesman for the Vienna-based International Atomic Energy Agency (IAEA).

"What they find and assess will be reported to the board," the spokesman added.

Iran has been conducting low level enrichment of uranium in the central city of Natanz for several years, in defiance of three sets of UN sanctions.

Western powers 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 says its nuclear programme is for civilian purposes only.

Salehi in his announcement said the project involved the use of 164 centrifuges -- the devices which rotate at supersonic speed to enrich uranium.

"This can make between three to five kilograms (6.5 to 11 pounds) of 20 percent enriched uranium per month for the Tehran reactor," he said, referring to Iran's internationally-supervised facility which produces medical isotopes.

Enrichment is the process to boost the percentage in uranium of the uranium-235 isotope, which splits in a chain reaction and releases energy.

The West is trying to convince Iran to sign on to an IAEA-brokered deal that envisages Tehran being supplied with the required nuclear fuel for the Tehran 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.

"If other countries or the IAEA meet our needs, maybe we can change our approach ... The door is not closed yet. Any time they (world powers) are ready, this (fuel deal) can be done," he told reporters.

Turkish Foreign Minister Ahmet Davutoglu meanwhile will visit Iran next week in an attempt to find a diplomatic solution to the stand-off, a Turkish diplomat said.

"The proposal is still valid ... We believe there is still an important chance" for peace, Davutoglu said in Ankara.

China too held out hopes that further talks could resolve the impasse.

"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 in Beijing.

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