But the diplomats said the discovery was not a "smoking gun" that the UN watchdog the International Atomic Energy Agency (IAEA) could use to take Iran before the UN Security Council, where it could face sanctions.

"It doesn't represent something new in terms of their capabilities," one diplomat said.

He said that if the IAEA found designs for actual weapons, "that would be the smoking gun, that's the killer" since Iran has repeatedly said its nuclear program is strictly for peaceful purposes.

The IAEA's board of governors is to meet March 8 to review the situation in Iran, following an ultimatum that expired last October 31 for the Islamic Republic to reveal all details of its nuclear program.

The IAEA said in November that Iran had been hiding sensitive details, including the enriching of small amounts of uranium and plutonium, for 18 years.

In Berlin Thursday, US undersecretary of state John Bolton said: "The response is clear. There's no doubt that Iran continues a nuclear program."

"We'll be looking seriously at what to do about Iran," he said, adding that the next steps could be taken in cooperation with Britain, France and Germany, the three countries which won an agreement from Iran in October to come clean on its nuclear program and to suspend the enrichment of uranium.

Centrifuges are used to enrich uranium both for nuclear reactors and for atomic bombs.

"There is no doubt we think that the case of Iran should be referred in the Security Council," Bolton said.

But in Rome, Iranian Foreign Minister Kamal Kharazi denied that Tehran had "a plan to develop nuclear weapons" and said his country was willing to cooperate with IAEA inspectors.

Kharazi, on a two-day visit to the Italian capital, was responding to questions from reporters about Bolton's claims that Iran was pursuing a programme to make nuclear weapons.

Diplomats said the IAEA had used revelations made in dismantling Libya's atomic program to guide them to what the Iranians had.

"It's the same stuff that the Libyans had. It's really tracking along very much the same lines," a diplomat said.

Diplomats explained that the IAEA was guided by what they found in Libya to trace purchases made through the international black market in nuclear technology and then confront the Iranians with the evidence.

"You can follow a lot of information from a lot of different sources and finally present something to them that they can't deny," a Western diplomat said.

"You paint them into a corner," the diplomat said.

He said that while the new revelation was not a "smoking gun, it's certainly going to keep the pot boiling," with concern about Iran's intentions.

"It doesn't help their credibility. It doesn't suggest 100 percent transparency," he said.

"Look at the contrast of Libya on the one hand and Iran on the other," Bolton said in praising the ease with which Tripoli let its nuclear installations be inspected while the Iranians withhold information.

The father of Pakistan's atomic bomb, Abdul Qadeer Khan, has confessed to assembling a vast international network that helped both Libya and Iran to obtain centrifuge designs.

Nuclear experts in Vienna said Khan was selling designs for a basic centrifuge known as a G-1, which the Iranians had admitted to having, but that the new design was for a G-2, an improved and more efficient version.

Khan had allegedly stolen designs for these centrifuges from the British-Dutch German consortium Urenco while working in the Netherlands in the 1970's.

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