Iran said on Sunday that its scientists have "tested the first nuclear fuel rod produced from uranium ore deposits inside the country," the website of the Iranian Atomic Energy Organisation said.

"After going through physical checks, it was inserted into the core of the Tehran research reactor in order to study how well it works," the website added.

Iran said last month that it planned to insert domestically produced uranium fuel into the Tehran research reactor, which produces isotopes for medical purposes and currently runs on a nearly depleted stock of nuclear plates bought from Argentina in 1993.

The Tehran reactor requires uranium enriched to 20 percent, a far higher level than that needed for Iran's Russian-built nuclear power plant in Bushehr, on the Gulf coast, which uses Russian fuel that is returned when spent.

The atomic energy organisation did not specify the level of enrichment of the trial fuel rod but Iran's programme to enrich uranium to the higher level has been at the centre of growing Western concerns about the goals of its nuclear programme.

Western governments have expressed fears that Iran's real aim is to develop a capability to enrich uranium to the 90 percent level necessary for a nuclear bomb, an ambition Tehran strongly denies.

Uranium enriched to 20 percent level is normally manufactured into plate, not rod, form for use as fuel.

Western governments nations have expressed scepticism that Iran has the technology to produce plates.

Iran already faces four sets of UN sanctions and additional unilateral Western sanctions imposed over its refusal to heed repeated ultimatums to suspend its uranium enrichment programme.

Ther announcement of the fuel rod test came a day after US President Barack Obama signed into law tough new sanctions targeting Iran's central bank and financial sector.