"That Iran is building a new generation of centrifuge is a lie. Iran is just conducting a preliminary study of the G2 centrifuge and has informed the International Atomic Energy Agency," Hossein Mussavian told the Hamshahri newspaper.

The official is the secretary for international relations in Iran's powerful Supreme National Security Council, and close to the body's chief Hassan Rowhan -- who last year negotiated a deal with Britain, France and Germany for Iran to cooperate with the IAEA.

Diplomats at the IAEA's headquarters in Vienna said last week that UN nuclear weapons inspectors in Iran had found blueprints for an advanced uranium enrichment centrifuge, the G2, that Tehran had failed to declare even as it was claiming to be providing full disclosure on its atomic energy program.

Enriched uranium is used as fuel for nuclear reactors but can also be used for making atomic bombs.

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

Nevertheless, the discovery has raised fresh alarms and has placed the Islamic republic -- accused by the United States of trying to develop nuclear weapons -- under further scrutiny ahead of the publication of a new IAEA report on Iran's controversial bid to generate atomic energy.

The IAEA board had given Iran until last October 31 to reveal all details of its nuclear program.

In addition, Iran had promised Europe's "big three" that it would suspend uranium enrichment, yet appears to be working within a narrow definition of that suspension.

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