In a move sharply escalating the diplomatic showdown over its nuclear aspirations, the Islamic Republic says it needs the fuel for a research reactor in Tehran that makes radioisotopes for medical purposes like cancer treatment.

But the US official, speaking on condition of anonymity, dismissed the rationale behind that urgent plan.

"This announcement is a provocative move in defiance of UN Security Council resolutions," the official told AFP.

"The Iranian government knows that this will not meet the humanitarian needs of the Iranian people, and risks creating more regional instability."

Iran said earlier on Monday that it had formally told the UN nuclear watchdog of its plan to produce higher enriched uranium, sparking fresh warnings by world powers that it will face new sanctions.

Tehran's atomic chief Ali Akbar Salehi, meanwhile, told state television on Sunday that the higher enrichment process will begin at the Natanz nuclear plant on Tuesday.

But the US official said Tehran could not make fuel for the Tehran reactor in time to ensure an uninterrupted supply of medical isotopes, raising questions about the "true motivation of going from 3.5 percent to 20 percent enrichment."

"If the Iranian government takes this step, it would further undermine confidence and raise serious concern about Iran's nuclear intentions, particularly following the disclosure of the Qom enrichment facility."

The United States, France and Britain and the International Atomic Energy Agency (IAEA) revealed last year that Iran was building a hitherto secret second uranium enrichment plant near the holy city south of Tehran.

The IAEA, in a plan backed by six top world powers, has proposed a deal which would see Iran ship its stockpile of low-enriched uranium (LEU) to Russia for further processing.

"The IAEA's proposal is the most practical and responsible solution -- it would address Iran's humanitarian need and build international confidence in Iranian intentions," the US official said.

But Iran sees the deal as a ruse by the West to confiscate its stockpiled uranium.

World powers gave Iran until the end of 2009 to accept the deal but the deadline was ignored, prompting movement towards fresh sanctions against the Islamic republic.

US Defense Secretary Robert Gates said in Rome on Sunday that it was now time for the world to unite and build pressure against Iran over the nuclear confrontation.

"No one has tried more sincerely to reach out and engage with Iran than the President (Barack) Obama," Gates said after meeting his Italian counterpart Ignazio La Russa.

"The international community has offered the Iranian government multiple opportunities to provide reassurance of its intentions. The results have been very disappointing."

"If the international community will stand together and bring pressure on the Iranian government, I believe there is still time for sanctions and pressure to work. But we must all work together."

The United States, Israel and other world powers suspect Tehran is making a nuclear bomb under the guise of a civilian program, an allegation Iran denies.

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