Iran has significantly expanded uranium enrichment with almost 5,000 centrifuges now operating and this has made it harder for UN inspectors to keep track of the disputed nuclear activity, said an International Atomic Energy Agency report.
The IAEA report said Iran had increased its rate of production of low-enriched uranium (LEU), boosting its stockpile by 500 kg to 1,339 kg in the past six months.
Iran's improved efficiency in turning out potential nuclear fuel is sure to fan Western fears of the Islamic Republic nearing the ability to make atomic bombs, if it chose to do so.
Oil giant Iran says it wants a uranium enrichment industry solely to provide an alternative source of electricity.
But it has stonewalled an IAEA investigation into suspected past research into bomb-making, calling US intelligence about it forged, and continues to limit the scope of IAEA inspections.
David Albright of the Institute for Science and International Security, a think tank that tracks proliferation issues, said Iran now had accumulated enough LEU to convert into high-enriched uranium (HEU) sufficient for one atom bomb.
This would require reconfiguring Iran's centrifuge network and miniaturizing HEU to fit into a warhead - technical hurdles that could take 1-2 years or more - and would not escape the notice of UN inspectors unless done at an undeclared location.
There are no indications of any such secret site. "Still, Iran is ramping up enrichment to reach the point of potential nuclear weapons capability."
"They haven't made a political decision to do that. But their lack of constraint is disappointing given Obama's effort to start negotiations," Albright told Reuters from Washington.
The UN nuclear watchdog report said Iran had 4,920 centrifuges, cylinders that spin at supersonic speed, being fed with uranium hexafluoride gas (UF6) for enrichment nonstop as of May 31, a jump of about 25 per cent since February.
Another 2,132 machines were installed and undergoing vacuum tests while a further 169 were being set up - bringing Iran's total number of deployed centrifuges at its underground Natanz enrichment hall to 7,231 - with 55,000 eventually planned.