"Taking enrichment to the level of 20 percent adds to the deficit of confidence in the nature of Iran's nuclear programme," EU foreign affairs chief Catherine Ashton said in a statement.

"This has already been aggravated by Iran's unwillingness to engage in meaningful talks," she said.

"The EU will continue to review all aspects of the Iranian nuclear issue on the basis of its dual-track approach and... stands ready to take the necessary steps to accompany the UN Security Council process."

Many in the West suspect the Islamic republic is developing technology to enrich uranium to highly refined levels to covertly build a nuclear bomb.

Iran says it is working on a civil energy programme and rejects attempts to force it to stop enrichment or farm out enrichment work abroad to fuel a research reactor in Tehran, in a plan pushed by the UN nuclear watchdog.

Ashton, who is the new nuclear negotiator with Iran on behalf of major world powers, said enriching uranium to 20 percent could still not provide fuel for the Tehran reactor.

"We continue to find it difficult to understand why Iran has not taken up the proposed agreement with the IAEA (International Atomic Energy Agency) which would have solved all these problems," she said.

The major powers have for years been using diplomacy coupled with sanctions to try to convince Iran to suspend enrichment in exchange for political and economic incentives, but with little success.

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