4/19/2007 12:00:00 PM GMT

Iran started producing nuclear fuel in its underground uranium enrichment plant at Natanz, the International Atomic Energy Agency  (IAEA) said.

A confidential letter by the IAEA said UN inspectors visited Natanz on April 15-16 and learned that Iran is running more than 1,300 centrifuges – the machines used to spin uranium gas into enriched material.  

The three-paragraph note, signed by IAEA deputy Director General Ollie Heinonen, also stated that some UF6 uranium gas was being fed into the centrifuges, adding that the move was part of an accelerating campaign to lay a basis for "industrial scale" enrichment in the Natanz facility.

Iran says it plans to install 50,000 centrifuges at the Natanz plant, and the head of the country’s atomic energy organization has suggested it could take 2-4 years to reach this goal.

The IAEA letter also said that Iran had stopped letting UN inspectors verify design work at the Arak heavy water reactor, under construction and scheduled for launching in 2009.

Tehran blocked IAEA access to Arak a few weeks ago to stop giving inspectors early design detail on future nuclear plants. The decision came in response to a March UN resolution expanding sanctions on Iran over its nuclear program.

Asked about the IAEA letter, Iran’s Ambassador Ali Ashgar Soltanieh told Reuters: "Enrichment is continuing under safeguards of the IAEA. Everything is continuing as planned and the IAEA is informed about it."

Earlier this month, Iranian PresidentMahmoud Ahmadinejad said that its uranium enrichment program reached an "industrial phase" – an announcement that was later downplayed by IAEA head Muhammad El-Baradei, who said that Tehran only installed "hundreds" of centrifuges for enriching uranium, not the thousands that would be needed for industrial production. 
 
El-Baradei also said that Tehran wouldn’t be able to produce the highly enriched uranium needed for a nuclear bomb as long as it remained under the supervision of IAEA inspectors. 

The West suspects Iran of seeking atomic weapons, but Tehran insists that its nuclear plans are strictly peaceful.

The IAEA's confirmation of Iran’s nuclear operations, and Tehran’s announcement earlier this week that it will issue tenders for two new nuclear plants show that the Islamic Republic has no intention of bowing to Western pressure over its nuclear program, despite being slapped with two sets of UN sanctions over its refusal to suspend uranium enrichment.

Earlier this week, President Ahmadinejad vowed to pursue plans to heighten Iran’s uranium enrichment capacity and said UN sanctions would not hamper centrifuge installation in the Natanz plant.