Iran has expanded its capacity to enrich uranium and now has 3,000 centrifuges operating — enough potentially to produce an atom bomb within a year — the United Nations nuclear watchdog reported yesterday.

But the Islamic Republic has also taken tentative steps towards calming international fears about having secret plans for a nuclear device, according to the International Atomic Energy Agency.

Iran’s deft diplomatic high wire act is likely to further frustrate efforts by the West to push further sanctions through the UN Security Council. Instead, the IAEA conclusions looked set to bolster the arguments of China and Russia that Tehran needs more time to open its books.

According to the report, Iran has given limited - but as far the agency can tell truthful - detail about its past nuclear work while still refusing to obey a UN demand for the suspension of the uranium enrichment programme.

“Iran has provided sufficient access to individuals and has responded in a timely manner to questions and provided clarifications and amplifications on issues raised,” said the ten-page report.

It added that the IAEA was “not in a position to provide credible assurances about the absence of undeclared nuclear material and activities in Iran”.

Tehran yesterday lost no time in trumpeting the findings as a vindication of its defiance against the West. President Ahmadinejad said: “The world will see that the Iranian nation has been right and the resistance of our nation has been correct.”

Iran’s official news agency said the US, France and Britain knew in advance they were “going to suffer a blow by the scheduled report” and were resorting to “extortion” by presenting the IAEA with a list of additional questions for Tehran to answer.

Britain and the US have made plain that they are not satisfied and will pursue further sanctions from the Security Council and the European Union. The Foreign Office issued a statement yesterday saying: “If Iran wants to restore trust in its programme, it must come clean on all outstanding issues without delay.” The US envoy to the IAEA, Gregory Schulte, had already stated: “Selective cooperation is not good enough.”

But China’s foreign minister Yang Jiechi, visiting Tehran yesterday, indicated support for Iran’s “right to peacefully use nuclear energy”. Yang’s spokesman said Iranian officials had told him they do not intend to develop nuclear weapons, adding: “China also hopes all parties show flexibility and make its due efforts to the peaceful resolution of the issue.”

The IEAE report confirmed that Iran, which insists its programme is for peaceful purposes, has expanded uranium enrichment to around 3,000 centrifuge machines. This number is enough to start industrial production of nuclear fuel and could provide the material needed for an atom bomb within a year.

There is growing concern among senior military sources in Washington - among whom enthusiasm for military action has waned - that such a level of production could trigger an air strike from Israel on Iran’s Natanz nuclear facility.

Israel’s prime minister Ehud Olmert was yesterday forced to deny a Reuters report that he was already preparing specific measures to counter a nuclear Iran.

Speculation about Israel’s intentions has been fueled by its recent air strike against an alleged nuclear plant at Dayr az-Zawr in Syria. One source has suggested that the Pentagon did not know about the plan until Israeli F- 151 aircraft were already on their way to the target on September 6.

Another claimed that the airstrike was designed to send a message to Iran which has surrounded its Natanz nuclear facility with the same air defence weapons purchased by Syria to defend Dayr az-Zawr. “It showed Iran that Israel can hit them whenever they want,” said the official.

Tehran’s co-operation with the IEAE has included handing over a long-withheld blueprint showing how to shape uranium metal into hemispheres for a nuclear warhead. The Iranians claim this document was given to them unsolicited by rogue Pakistani scientist Abdul Qadeer Khan.

Iran also provided information about a new centrifuge system called the “P2” - believed to operate with technology provided by Khan - which can refine uranium two or three times faster than the earlier prototype.

Yesterday’s IEAE report added, however, that Iran’s “cooperation has been reactive rather than proactive”.

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