The announcement sent alarm bells ringing in the West, with the United States saying it added urgency to its efforts to clinch new sanctions against Tehran. The European Union also reiterated that the bloc will back UN action.

"Taking enrichment to the level of 20 percent adds to the deficit of confidence in the nature of Iran's nuclear programme," EU nuclear envoy and foreign policy chief Catherine Ashton said in a statement. "This has already been aggravated by Iran's unwillingness to engage in meaningful talks."

She said Europe "stands ready to take the necessary steps to accompany the UN Security Council process."

Pro-regime protesters demonstrated outside several European embassies in Tehran on Tuesday against the EU stance on Iran's nuclear programme.

Earlier Iran's atomic chief Ali Akbar Salehi told the official IRNA news agency: "From today we have started the 20 percent enrichment... in Natanz."

Experts say that once Iran enriches uranium to 20 percent, it can proceed to the 93 percent needed to produce nuclear weapons since the technology is the same.

Russia, Iran's long-time nuclear partner, questioned Tehran's intentions.

"Iran's decision to start its own enrichment of uranium... heightens doubts on the sincerity of Iran's intentions to end the international community's existing concerns," a foreign ministry statement said.

Earlier, news agencies quoted Nikolai Patrushev, secretary of the Russian national security council, as saying: "Iran claims it is not trying to acquire nuclear weapons.

"But actions such as starting to enrich low-enriched uranium up to 20 percent raise doubts in other countries and these doubts are fairly well-grounded."

In Washington, US President Barack Obama reacted by saying the international community was moving "fairly quickly" to impose new sanctions on Iran.

"Despite the posturing that the nuclear power is only for civilian use... they in fact continue to pursue a course that would lead to weaponisation, and that is not acceptable to the international community."

Earlier in Paris, Pentagon spokesman Geoff Morrell said US Defence Secretary Robert Gates is aiming for a fresh UN sanctions resolution against Iran in "a matter of weeks, not months."

Israeli Prime Minister Benjamin Netanyahu called for immediate "crippling sanctions" against its arch-foe.

The UN nuclear watchdog said its inspectors were monitoring the stepped-up enrichment work.

A spokesman for the Vienna-based International Atomic Energy Agency (IAEA) confirmed it had inspectors at Natanz, adding: "What they find and assess will be reported to the board."

Iran, which says its nuclear programme is purely civilian, has conducted low-level enrichment of uranium in the central city for several years, in defiance of three sets of UN sanctions.

Salehi said the project involved the use of 164 centrifuges, which rotate at supersonic speed to enrich uranium.

"This can make between three to five kilograms (6.5 to 11 pounds) of 20 percent enriched uranium per month for the Tehran reactor," he said of Iran's internationally supervised facility which produces medical isotopes.

Enrichment is the process to boost the percentage in uranium of the uranium-235 isotope, which splits in a chain reaction and releases energy.

The West is trying to convince Iran to agree to an IAEA-brokered deal that envisages it being given fuel for the Tehran reactor in exchange for its low-enriched uranium (LEU).

The deal has hit a roadblock as Tehran, despite saying it is ready "in principle" to agree, insists that not all its LEU be shipped out at once as world powers demand.

Foreign ministry spokesman Ramin Mehmanparast on Tuesday left the door open for a deal.

"If other countries or the IAEA meet our needs, maybe we can change our approach... The door is not closed yet. Any time they (world powers) are ready, this (fuel deal) can be done," he told reporters.

Salehi too reiterated that "Iran is ready for the unconditional exchange. If this deal takes place in time we are ready to stop this process (20 percent enrichment)."

Meanwhile, Turkish Foreign Minister Ahmet Davutoglu will visit Iran next week in an attempt to find a diplomatic solution, and China's foreign ministry on Tuesday also expressed hopes that the impasse can be resolved.

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