Iran is forging ahead with a nuclear fuel enrichment programme in defiance of world pressure and is stonewalling UN probes spurred by fears it secretly wants atomic weapons, a UN watchdog report said yesterday.

The report by International Atomic Energy Agency director Mohamed ElBaradei was circulated to IAEA board members before they meet on March 6 to discuss it. The report will be forwarded to the UN Security Council, which can impose sanctions.

"It is regrettable and a matter of concern that the uncertainties related to the scope and nature of Iran's nuclear programme have not been clarified after three years of intensive agency verification," said the report, obtained by Reuters.

It said Iran had begun testing a cascade of 20 centrifuges at its Natanz pilot uranium-enrichment plant, pressing ahead with efforts to purify nuclear fuel.

Iran had also begun substantial renovations of Natanz's system handling UF6 gas, which is converted by centrifuges into enriched atomic fuel. It said the cascade of 20 centrifuge machines began to undergo vacuum testing on February 22.

The report came as the West reacted with deep scepticism to a tentative Russia-Iran deal on uranium enrichment intended to help resolve the dispute.

The head of Iran's nuclear programme said on Sunday that Tehran had reached a "basic" agreement with Moscow on a proposed joint venture to enrich uranium in Russia. But Russian officials were afterwards reported as saying Iran had so far made no commitment to renounce home-grown nuclear enrichment, as demanded by Russia and the major Western powers.

France and Germany said the outline deal represented no significant progress and the United States also expressed reservations.

Mr ElBaradei's report said Iran had also produced 85 metric tonnes of UF6 gas at its uranium-conversion facility in Isfahan since September 2005, which would be enough for several atomic bombs once Iran masters full-scale enrichment technology.