The diplomat did not specify the exact date that the cascade began operating.

Iran was only testing the cascade and had not yet used it to enrich uranium, the diplomat added.

While enriched uranium is used as fuel for nuclear reactors, highly enriched uranium can also be used to make nuclear bombs.

The spokeswoman for the International Atomic Energy Agency, Melissa Fleming, said she was "not in a position to comment" on the claim.

The United States maintains that Iran is seeking to develop atomic weapons, but Iran insists its nuclear programme is for purely peaceful purposes.

The European Union's foreign policy chief Javier Solana has been trying to persuade Tehran to abandon enrichment, but his latest round of talks with Iranian nuclear negotiator Ali Larijani broke down this month.

In the face of Iran's refusal to halt enrichment, Britain, France and Germany have now drawn up a draft resolution to put to the UN Security Council calling for sanctions against the Islamic republic.

Iranian President Mahmoud Ahmadinejad said on Monday that his country would not retreat even "an inch" over its nuclear programme despite the threat of sanctions.

earlier related report
Iran Defiant On Nuclear As Sanctions Loom
Iranian President Mahmoud Ahmadinejad vowed Monday his country will not retreat even "an inch" over its nuclear programme despite the mounting threat of UN sanctions. "Today, the Iranian nation demands the full use of nuclear energy and this is the demand of all Iranians, in every city and village, young and old. All Iranians stand by this and will not retreat even an inch," Ahmadinejad said in a speech broadcast live on state television.

His comments came as Britain, France and Germany draw up a draft sanctions resolution to put to the UN Security Council after Iran refused to obey repeated deadlines to suspend uranium enrichment.

Western countries fear Iran is secretly trying to build nuclear weapons, but the Islamic republic insists its programme is solely aimed at generating energy.

"Iranians will stand firm until we reach our nuclear goal and there is only one more step to go," he said in his address in Ray, a town south of Tehran, in reference to Iran's bid to master uranium enrichment.

While Western nations on the Security Council are pushing for tough sanctions, Russia and China -- which both have strong economic ties with Iran -- are likely to oppose a severe regime.

Russian Foreign Minister Sergei Lavrov, speaking in Moscow, refused to be drawn on what stance Russia would take. "At the moment, unfortunately or luckily, there is no resolution."

"The consultations that we are currently conducting permit all the participants to better understand whether there are real prospects for finding an agreement that would open the way to negotiations," Lavrov said.

If agreed, a first set of punitive measures would likely focus on banning the supply of material and funding for Iran's ballistic missile and nuclear programmes.

Other steps could include asset freezes and travel bans on nuclear scientists.

Ahmadinejad's defiant stance was echoed by his top nuclear negotiator Ali Larijani, who held four rounds of talks with EU foreign policy chief Javier Solana that failed to find a solution to a standoff.

"If the Westerners move towards a radical move, their action will not win them much and will make the Islamic Republic of Iran determined to continue its nuclear programme," he said, according to the IRNA agency.

Iranian government spokesman Gholam Hossein Elham played down the consequences of possible sanctions: "The economic situation is in favour of the Islamic republic and there is no concern."

He told reporters that the threat of sanctions on Iran -- OPEC's second largest producer -- was "psychological warfare" by world powers and that the nation was in a "very influential position" on the international scene.

On Sunday, Tehran had warned it would take "appropriate measures" in retaliation for any punitive action over its nuclear work.

Asked if any repercussions would have an effect on the Strait of Hormuz, a vital channel for transporting oil out of the Gulf, foreign ministry spokesman Mohammad Ali Hosseini said: "It depends on the kind of sanctions."

Oil market participants have in the past expressed fears that Iran could block the strait in retaliation for sanctions and send the price of oil spiralling. But Iran's leaders have repeatedly vowed not to use oil as a weapon.

earlier related report
US Says UN Talks On Iran Sanctions Could Take Weeks
Washington (AFP) Oct 23, 2006 The UN Security Council will likely discuss sanctions against Iran for its controversial nuclear program for several weeks before voting on them, the US State Department said Monday. Representatives at the United Nations of Britain, France and the United States have drawn up a draft sanctions resolution to put to the UN Security Council, but have not yet reached an agreement, State Department spokesman Sean McCormack said.

"We, the French and the British -- I think that there's agreement, widespread agreement -- although not total agreement -- on the elements of a resolution, as well as how this resolution might relate to further diplomatic efforts," he said at a briefing with reporters.

"And we have also been consulting with the Chinese as well as the Russians on this all along; although the core conversations have been among the P-3 (US, Britain and France)," he said.

Diplomats are considering a series of initial sanctions that could be imposed against the Iranian government for having ignored a UN Security Council deadline on August 31 to suspend its disputed uranium enrichment activities.

The United States and other major powers fear Iran's uranium enrichment could be diverted to make nuclear weapons, but the Islamic republic insists its nuclear program is solely aimed at generating energy.

China and Russia, which have significant economic interests in Iran, are reluctant to impose tough measures against Tehran.

"I would expect that this is going to be one of the top items on the Security Council calendar for the next several weeks," McCormack said.

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