A new UN atomic agency report due Thursday or Friday is expected to detail how Iran is continuing to expand its nuclear programme despite painful sanctions and talk of Israeli military action.

Just as Iran seeks to improve its image by hosting a Non-Aligned Movement summit attended by UN head Ban Ki-moon, the report will show how Tehran is boosting uranium enrichment in defiance of UN Security Council resolutions, diplomats told AFP.

The International Atomic Energy Agency document, which will be circulated to member states but not published, is also expected to criticise Iran sharply over its suspected "sanitization" of the Parchin military base.

Enriched uranium can be used for peaceful purposes such as in nuclear power but also, when purified to higher levels, in an atomic bomb.

"Our enrichment activities will never stop and we are justified in carrying them out, and we will continue to do so under IAEA supervision," Iran's envoy to the IAEA, Ali Asghar Soltanieh, said in Tehran ahead of the NAM summit.

Many in the international community suspect that obtaining a nuclear arsenal, or at least being on the threshold of having one, is the real aim of Iran's programme, something which Tehran denies.

It is because the IAEA says it is "unable" to conclude that Iran's activities are peaceful that the Security Council has called on Iran to cease all enrichment, imposing four rounds of sanctions.

But not only has it not ceased enrichment, Iran has steadily expanded its programme, even with additional US and EU sanctions hitting and speculation of Israeli strikes, and the IAEA's new report is expected to tell the same story.

Diplomats in the IAEA's home city of Vienna told AFP that they think the agency will say that Iran has since the last report in May installed some 350 new centrifuges to enrich uranium at its Fordo facility near the holy city of Qom.

Fordo is not only dug into a mountain, making it tough to bomb, but it is also enriching uranium to purities of 20 percent, which technically speaking is a short hop from the 90 percent needed in the fissile core of a nuclear weapon.

The IAEA's last report said that Fordo contained just over 1,000 centrifuges, some 700 of which were operating. Iran has told the IAEA that eventually it plans to have 3,000 machines in place there.

At its larger Natanz site meanwhile, also heavily bunkered, Iran has around 9,000 centrifuges, most of which are enriching to lower levels.

The IAEA is also expected to express dismay over Parchin, where Western countries have accused Iran of removing evidence of past research into nuclear weapons explosives.

Iran says that the IAEA's information on Parchin and other sites, set out a in a major report last November on what it calls the "possible military dimensions" of Iran's programme, is fabricated by Tehran's enemies.

In its last report in May the IAEA said that activities spotted at Parchin by satellite "could hamper the agency's ability to undertake effective verification."

Diplomats said this time it might go further and say that visiting the site would now be pointless.

Last Friday the latest in a string of meetings this year between Iran and the IAEA, which wants Tehran to grant access to documents, sites and people, ended in failure.