Iran has begun installing 6,000 new centrifuges at its uranium enrichment plant, President Mahmoud Ahmadinejad said yesterday, defying the West which fears Tehran is trying to build nuclear bombs.

The US and Israel said the move showed once again that Tehran intended to ignore UN Security Council demands to halt sensitive nuclear work.

France suggested major powers may have to toughen sanctions on the Islamic Republic.

The Security Council has since 2006 imposed three rounds of limited sanctions on Iran for refusing to stop enriching uranium, which can be used as fuel in power plants or provide material for nuclear weapons if refined much further.

Iran, the world's fourth largest oil exporter, says it wants nuclear power to generate electricity to meet booming demand.

"Today we have started the installation of 6,000 new centrifuges... I will announce more achievements tonight," the official IRNA news agency quoted President Ahmadinejad as saying at Natanz in central Iran, surrounded by anti-aircraft guns.

He delivered a speech last night at a ceremony in Tehran to celebrate Iran's National Day of Nuclear Technology.

US Secretary of State Condoleezza Rice said incentives offered to Iran in 2006, including civil nuclear cooperation, had been "very generous".

"Iran faces the continued isolation in the international community because it will not take a reasonable offer from the international community," she told reporters.

But Foreign Minister Sergei Lavrov of Russia, which is building Iran's first nuclear power plant, told Ekho Moskvy radio that "new positive proposals" should be put to Iran, without specifying what they might be.

The US has not ruled out military action to stop Iran's nuclear activities and Israeli government spokesman Mark Regev, in reaction to Mr Ahmadinejad's announcement, urged the international community to stop Tehran's "aggressive" atomic work.

A senior Iranian nuclear official said Mr Ahmadinejad had also inspected a "new generation" of centrifuges built by Iranian scientists at a research facility at Natanz.

Diplomats in Vienna said last week that Iran was installing advanced enrichment centrifuges at the underground Natanz facility, accelerating activity that could give Tehran the means to make atom bombs in the future if it chose to.

Centrifuges are machines that can spin compounds of uranium at supersonic speed to separate out and concentrate the most radioactive isotope of the element.

Nuclear analysts say they believe Iran aims to gradually replace its start-up "P-1" centrifuge with a new generation it has adapted from a "P-2" design able to enrich uranium two or three times faster than its older counterpart.

The analysts say around 1,500 centrifuges would be needed for Iran to manufacture the minimum amount of highly enriched uranium needed for one crude warhead.

The five permanent members of the UN Security Council and Germany plan to meet this month to discuss whether to sweeten their 2006 offer of incentives to persuade Iran to curb its nuclear programme, US officials said this week.

Iran has ruled out halting or limiting its nuclear work in exchange for trade and other incentives, and says it will only negotiate with the UN nuclear watchdog.

France said major powers may need to tighten UN sanctions against Iran if it continues to ignore their demands.

"I fear that we will have to continue on the path of sanctions if we do not receive a response from the Iranians," French Foreign Minister Bernard Kouchner said in Paris.

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