Iran says it has upgraded the uranium enrichment programme at its complex in Natanz, under the supervision of the International Atomic Energy Agency, the IAEA.

The announcement is set to heighten the controversy surrounding Iran's nuclear programme. The West fears that the Iranian government plans to develop nuclear weapons, an accusation strenuously denied by Tehran.

The 20 percent enriched uranium now being produced at Natanz represents a major step forward for Iran but falls well short of the grade needed to manufacture nuclear weapons.

The US State Department wants the United Nations Security Council to vote on a resolution to impose new sanctions on Iran within weeks.