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Iran said on Monday it has formally told the UN nuclear watchdog of its plan to produce higher enriched uranium, sparking US and French calls for "strong" sanctions against the defiant Islamic republic.

"Iran's official letter about commencing the 20 percent enrichment activity in order to provide fuel for the Tehran reactor has been handed over to the IAEA," Ali Asghar Soltanieh, Tehran's envoy to the International Atomic Energy Agency, told state-owned television from its Vienna base.

Iran's atomic chief Ali Akbar Salehi announced late on Sunday that Tehran would begin enriching uranium to 20 percent from Tuesday, and that the IAEA would be informed of its decision beforehand.

The announcement was met with a sharp riposte on Monday from world powers, which fear that Iran's nuclear enrichment programme masks a bid to make atomic weapons, despite Tehran insisting its purpose is entirely peaceful.

France's President Nicolas Sarkozy and US Defence Secretary Robert Gates agreed in talks in Paris that "strong" new sanctions must be passed against Iran over its nuclear drive, the French presidency said.

Sarkozy and Gates "agreed that the time has come for the adoption of strong sanctions, in the hope that dialogue will be resumed," an official at the French presidency said.

Gates, whose aides said earlier the United States would ask France to submit a sanctions motion at the council, which it currently chairs, said: "We are very much agreed that action by the international community is the next step."

In Washington, a US official said the plan was "a provocative move in defiance of UN Security Council resolutions."

Developments in Iranian nuclear standoff

"The Iranian government knows that this will not meet the humanitarian needs of the Iranian people, and risks creating more regional instability," the official told AFP, on condition of anonymity.

"If the Iranian government takes this step, it would further undermine confidence and raise serious concern about Iran?s nuclear intentions."

Ehud Barak, defence minister of Israel which is widely believed to be the Middle East's sole if undeclared nuclear-armed power, told a meeting of his Labour party that new sanctions were needed.

He said Tehran's enrichment decision was "further proof that Iran is deceiving the whole world and the correct response is to begin a determined campaign of decisive and permanent sanctions against Iran."

Neither the United States nor Israel has ruled out taking military action against Iran's nuclear facilities.

IAEA chief Yukiya Amano "noted with concern this decision, as it may affect, in particular, ongoing international efforts to ensure the availability of nuclear fuel for the Tehran research reactor," his agency said.

Key powers push for Iran sanctions

French Foreign Minister Bernard Kouchner, meanwhile, insisted that Iran does not have the ability to enrich uranium to 20 percent and accused Tehran of "blackmail."

At the IRIS institute for strategic and international relations in Paris, Karim Pakzad saw hardline President Mahmoud Ahaminejad's move as a "bluff, because the Iranian government is weakened domestically."

On the domestic scene, Iran's opposition criticised Ahmadinejad's handling of the crisis.

"On the nuclear issue, which influential nation do we have on our side?" Mir Hossein Mousavi asked in a talk to university students, his website kaleme.org reported on Monday.

"Unlike you, we do not agree to proceed with an adventurist policy, to insult them one day and smile at them the next," he said.

Germany and Britain on Monday also warned of fresh sanctions, while Russia, a close ally of Iran, reiterated that Iran should send its uranium abroad for higher enrichment in line with a UN-brokered deal.

Iran capable of enriching uranium to 'higher levels'

Salehi's announcement of plans to enrich uranium to 20 percent -- the level required for reactor fuel -- came just hours after he was ordered on Sunday to do so by Ahmadinejad.

"The higher enrichment will begin at the Natanz plant from the day after tomorrow (Tuesday)," Salehi said.

Iran's main uranium enrichment facility is in the central city where it has continued sensitive atomic work defiantly for years despite three rounds of UN sanctions.

Soltanieh told the official IRNA news agency that Iran's letter to the IAEA invited the agency's inspectors "to be present at the site, since all nuclear activities of the Islamic republic are under the IAEA supervision."

Atomic chief Salehi, however, said Tehran would stop further enrichment if the long-negotiated UN-drafted deal with world powers is concluded.

AFP