The announcement comes three days after the International Atomic Energy Agency demanded that Teheran freeze all operations connected with uranium enrichment or face possible retaliation.

The head of the Iranian atomic energy authority, Gholamrezah Aghazadeh, said at the IAEA yesterday that the country had begun converting 37 tonnes of yellowcake crude uranium into uranium hexafluoride gas, which can be enriched to either fuel or weapons-grade uranium, said The Guardian.

Iran's President Mohammad Khatami said Teheran would press ahead with its atomic programme.

Iran refuses to cap N-plans

"We are determined to obtain peaceful atomic technology even if it causes the stop of international supervision," he said. "We have never wanted nuclear weapons. We want peaceful technology."

The enrichment freeze is the main aim of the Americans and the EU, but Iran is adamant that it will not give up its enrichment programme, which has been developed mostly in secret over the past 20 years, the paper said.

This summer, Iran told Mohamed ElBaradei, the IAEA director general, that it intended to convert 37 tonnes of yellowcake in "August/ September". Experts say that this could provide material for up to five nuclear warheads, The Guardian said.