"They are continuing with contracts with local firms to assemble centrifuges. That is something we don't view favorably," a Western diplomat close to the Vienna-based International Atomic Energy Agency (IAEA) told AFP.

Iran had pledged in November to suspend uranium enrichment as a confidence-building measure, in answer to US charges that Tehran is secretly trying to develop nuclear weapons. Tehran vehemently denies these charges.

Then in December Tehran ended months of wrangling by signing a key UN treaty protocol allowing surprise inspections of its nuclear facilities.

But Iran has interpreted its pledge to suspend uranium enrichment in a narrow sense, stopping such activities at its Natanz nuclear fuel-making plant, but continuing to assemble centrifuges in case it decides to resume making highly-enriched uranium, which can be used both as fuel for reactors or to make the bomb, diplomats said.

A Western diplomat said Iran was keeping itself ready "to return in force to production" by continuing to assemble centrifuges.

"We know that the IAEA and Iran continue to negotiate on the terms of the suspension. Some things are agreed. Others aren't," he said.

IAEA spokesman Mark Gwozdecky told AFP his agency was "still in consultation with Iran about the scope of their suspension."

The US spokesman for Washington's IAEA mission in Vienna, Michael Garuckis, said: "The scope of the suspension must be comprehensive."

Iran sees suspension as merely turning off centrifuges used to make highly enriched uranium but the IAEA, building on an agreement Britain, France and Germany reached with Iran in October, want a halt to the whole range of enrichment activities, including deliveries, construction of new facilities and research, diplomats said.

The agreement came after IAEA inspectors had discovered traces of highly enriched uranium at two sites in Iran, traces Iran claims came from contaminated equipment it had imported rather than uranium it had itself processed.

A senior Western diplomat said he was sure the Iranians were not at this time importing equipment for nuclear technology.

The IAEA has condemned Iran for nearly two decades of covert nuclear activities, although it says there is no proof Tehran is trying to build a bomb, and warned against future breaches of international non-proliferation obligations.

Gwozdecky said IAEA inspection teams "have been in Iran . . . recently and will be again this month (January)," to prepare a report for the next IAEA meeting on the matter in March.

A Western diplomat said IAEA teams would be leaving for Iran next week.

WAR.WIRE