Vienna: The UN atomic agency IAEA confirmed on Tuesday that Iran has started enriching uranium at a new site in a difficult-to-bomb mountain bunker, in a move set to further heighten tensions with the West.

"The IAEA can confirm that Iran has started the production of uranium enriched up to 20 per cent... in the Fordo Fuel Enrichment Plant," International Atomic Energy Agency spokeswoman Gill Tudor said in a statement.

"All nuclear material in the facility remains under the Agency's containment and surveillance," the Vienna-based watchdog added.

The Islamic republic admitted the existence of the facility in 2009 and earlier reports from the IAEA had said that Iranian scientists were preparing the facility to begin operations.

Iran, which insists its nuclear programme is for exclusively peaceful purposes, has repeatedly said it will not abandon uranium enrichment despite four rounds of UN Security Council resolutions calling on Tehran to desist.

While nuclear energy plants need fuel enriched to 3.5 percent, Iran says the 20-per cent enriched uranium is needed for its Tehran research reactor to make isotopes to treat cancers.

Western powers, however, reject this, believing Iran has been researching ways to develop and deliver nuclear weapons, and has piled on sanction after sanction to try to halt the work.