Providing satellite photos to back up its assertion, the Institute for Science and International Security (ISIS), also quoted Iranian security official Hassan Rowhani saying on February 7: "We may be able to produce heavy water soon, within the next few weeks."

EU negotiators Britain, France and Germany are trying to convince Iran to dismantle nuclear fuel work which the United States says is part of a covert atomic weapons development, in return for economic and political rewards.

But Iran insists its nuclear programme is purely for civilian energy needs.

According to the ISIS the heavy water would supply a 40-megawatt reactor being built despite objections from the Vienna-based International Atomic Energy Agency (IAEA), which is investigating Iran on the US charges that Tehran is secretly developing nuclear weapons.

"Adjacent to the reactor construction site is the heavy water production plant, which is anticipated to supply the necessary heavy water for the heavy water reactor," ISIS said, explaining three crystal-clear satellite photos taken by the US commercial firms Space Imaging and DigitalGlobe.

It said the photographs had been taken on February 17 and 27, 2005 and on February 29, 2004.

ISIS president David Albright, a former UN weapons inspector, said he also had ground photos, some sent to his institute anonymously, which showed the Iranians already testing the production plant as there was steam coming off pipes.

"It looks like the plant is completed," Albright said. He said the "huge" facility, its towers for distilling heavy water clearly visible in the satellite photos, has been under construction for several years.

AFP had revealed Thursday that Iran was already pouring the foundation for the reactor, citing diplomats working from satellite photos, and this is also clearly visible in the ISIS-supplied images.

Albright said there was even progress being made in the images 10 days apart, although the foundation was not yet completed. Work on the reactor could be completed in 2009.

The construction work for the reactor began in September, just after the IAEA had asked Iran to refrain from building it as a "confidence-building measure" to show it does not seek to make nuclear weapons, a diplomat who asked not to be named told AFP.

IAEA deputy director Pierre Goldschmidt had Tuesday told an IAEA governing board meeting in Vienna that Iran was pressing ahead with work on the Arak reactor but he gave no details.

Goldschmidt said IAEA inspectors had not visited the site since the agency's board adopted a resolution on September 18 calling on Iran "voluntarily to reconsider its decision to start construction of a research reactor moderated by heavy water."

The IAEA began its investigation into Iran after revelations in August 2002 from the Iranian resistance group the National Council of Resistance of Iran (NCRI) that Tehran was working on the heavy-water production plant as well as a uranium enrichment plant in Natanz, two facilities which had not been declared to the IAEA and which the NCRI said were signs of covert weapons development.

These facilities have since been inspected by the IAEA but US ambassador Jackie Sanders pointed at the board meeting in Vienna this week to the reactor construction as an example of "alarming . . . unresolved questions about Iran's nuclear program."

Iran has said it wants to use the heavy-water reactor, which takes natural uranium oxide as fuel, to make medical isotopes.

But the IAEA is concerned about the proliferation risk as the reactor could produce 8-10 kilograms of plutonium per year, enough to make at least one nuclear bomb annually.

Iran has rejected an offer from the European Union to help it get a light-water research reactor in exchange for giving up its heavy-water project.

All rights reserved. � 2005 Agence France-Presse. Sections of the information displayed on this page (dispatches, photographs, logos) are protected by intellectual property rights owned by Agence France-Presse. As a consequence, you may not copy, reproduce, modify, transmit, publish, display or in any way commercially exploit any of the content of this section without the prior written consent of Agence France-Presse.