"We view with great concern the IAEA report that Iran is about to convert 37 tons of 'yellowcake' uranium into uranium hexaflouride gas, as well as Iran's recent announcement that it intends to test its gas centrifuges," said John Bolton, undersecretary of state for arms control and international security.

The Iranian move appears to mark a further step away from its commitments to suspend as a confidence-building measure the enrichment process that is crucial to making what can be the explosive core of an atomic bomb.

The news came in a report by the International Atomic Energy Agency ahead of an IAEA meeting in Vienna later this month to review the agency's investigation into US charges that Iran is secretly developing nuclear weapons.

This was "further strong evidence of the compelling need to take Iran's nuclear program to the Security Council, Bolton said.

"The United States will continue to urge other members of the IAEA Board of Governors to join us in this effort, to deal with the Iranian threat to international peace and security," he said.

Uranium enriched to levels of more than 80 percent can be used in nuclear weapons but also for peaceful purposes and Iran has insisted on the civilian nature of its program and its right to enrich uranium for fuel.

Iran plans "a large-scale test of (converting) 37 metric tonnes of yellowcake (uranium in mineral form)" into uranium hexafluoride, the gaseous "feed-stock" for enriching uranium to what can be bomb-grade levels, a senior diplomat close to the IAEA said in Vienna.

The report said the test had been planned for August or September.

Iran had conducted a smaller test in "May and June 2004" for making uranium hexafluoride, the report said.

The diplomat said the upcoming production of the uranium hexafluoride would produce a "significant amount" of the gas, an amount that would apparently be enough to produce enough enriched uranium that could produce at least one atom bomb.