The report, which the UN's nuclear watchdog, the International Atomic Energy Agency (IAEA), is due to unveil in September, says the IAEA has found material indicative of different phases of uranium enrichment in Iran, the officials told AFP.

The discovery will strengthen the case put forward by the United States and France, who suspect Iran is secretly trying to develop nuclear arms.

IAEA Secretary General Mohamed ElBaradei this week told the press the discovery of "highly enriched uranium" in Iran was "very worrying".

The report says UN inspectors also found UF-4 (uranium tetrafluoride) and UF-6 (uranium hexafluoride), molecular compounds used in the enrichment process, in nuclear centrifuges in Iran.

El Baradei did not say to what extent the uranium had been enriched and nor does the report, which he will formally present to the IAEA's board of governors when they meet on September 8-11.

The governors could decide at that meeting to refer the matter to the UN Security Council, a step which carries the threat of sanctions.

The document has already been handed over to representatives of the IAEA board's 35 member countries and many say it belies Iran's claim that its only aim is to produce 6,000 megawatts of nuclear electricity by 2020.

"IAEA inspectors found two different types of highly enriched particles. You do not need that to make nuclear power," one Western diplomat told AFP.

Others said uranium reprocessing was too costly to enable Iran to reduce its energy bill and that it could use its facilities to produce plutonium for a nuclear bomb.

But not everyone believes the UN findings indicate Iran has a nuclear weapons programme.

One Vienna-based nuclear expert said there was no proof Iran was trying to enrich uranium to more than 90 percent, the level needed to make nuclear arms. Uranium used in the generation of nuclear power only needs to be enriched three to four percent.

"The British, Dutch and Germans also prefer to use centrifuge programmes to enrich uranium. This in itself is not necessarily significant," he said.

"The real concern thrown up by the report is why Iran has covertly conducted these activities, why it did not declare them as it must under the nuclear Non-Proliferation Treaty".

Another senior official said most of the fissile material found amounted to "basic building blocks for nuclear activities".

But he warned: "The context in which it was found shows that Iran is in non-compliance (with the NPT)."

"There are certainly countries who will push at the September meeting that Iran is reported to the UN Security Council," he said.

The report shows that Iran has lied about six aspects of its nuclear programme, one diplomat alleged.

Tehran has now admitted it began working with heavy water -- which some nuclear states use to produce plutonium -- in the 1980s and started its centrifuge programme in 1985, he said.

"These admissions came under duress, Iran changed its story because IAEA inspectors have found evidence that made it impossible for it to do otherwise."

Iran also conceded for the first time that it has imported nuclear equipment.

That admission came after enriched uranium was found at Natanz, 290 kilometres (180 miles) south of Tehran, where an uranium processing plant is being built. Tehran argued that enriched uranium had only been discovered there because machinery delivered to the site had been tainted before being sent there.

IAEA sources confirmed that Iran was refusing to say who had supplied the equipment and that the nuclear watchdog was investigating which countries were helping it develop its nuclear programme.

France said in May in a report to the 40-state Nuclear Supplier's Group that Iran has tried to buy nuclear material from French manufacturers and estimated it "could develop nuclear weapons within a few years".

WAR.WIRE