Diplomats at the United Nations Nuclear Agency say Iran has started small-scale uranium enrichment -- a process that produces fuel that can be used in nuclear weapons and reactors.
The International Atomic Energy Agency officials, speaking on condition of anonymity, say uranium gas has been fed into some machines.
Iran had warned it would resume large-scale enrichment activities after the I.A.E.A. referred it to the U.N. Security Council for possible sanctions over its nuclear program.
Iran also further postponed talks set for this week with Russia about a proposal to process uranium on Russian soil for use in Iran's nuclear plants.
U.N. Secretary-General Kofi Annan met with President Bush on Monday) and expressed hopes that no steps would be taken to escalate the situation. The West accuses Iran of trying to develop nuclear weapons -- a charge Iran denies.