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Iran has assembled 1,300 centrifuges at its Natanz nuclear plant and has begun the process of enriching uranium, the UN nuclear watchdog has confirmed.

The International Atomic Energy Agency said eight cascades of centrifuges, the machines that spin uranium gas into enriched material, were now operating.

Earlier this month Iran's president said Natanz was ready to enrich uranium on an industrial-scale.

The West suspects Iran of seeking atomic weapons, a charge Iran denies.

Tehran insists its nuclear programme is for peaceful purposes only.

Inspections continuing

The confidential three-paragraph letter was written by the director general of the IAEA, Olli Heinonen.

It confirmed the findings of a team of IAEA inspectors who conducted a routine "design information verification" mission to Natanz in the past week.

Those inspectors were informed that Iran was now operating 1,312 centrifuges at Natanz, the letter said.

An undefined quantity of uranium gas was being fed into the centrifuges, the letter added.

The disclosure of the inspectors' findings comes after the head of the IAEA, Mohammed ElBaradei, downplayed Iran's claim that it was beginning industrial-scale production.

Speaking in Saudi Arabia last week, Mr ElBaradei said Iran would need thousands of centrifuges, but had only hundreds operating at present.

He also said that Iran would not be able to produce the highly enriched uranium needed for a nuclear bomb as long as it remained under the supervision of IAEA inspectors.

The UN Security Council has imposed a package of sanctions on Iran over its refusal to cease enriching uranium, which some Western countries fear could be part of a secret nuclear weapons programme.