Iranian scientists have begun feeding gas into a second cascade of centrifuges to enrich uranium, defying UN threats of sanctions over Iran's nuclear programme, the ISNA news agency reported on Friday.
"The second cascade was set up two weeks ago and this week gas was injected in them," an unidentified official told the agency.
"We have the product of the second cascade," the source added.
Iran on Wednesday confirmed it had installed new equipment to step up uranium enrichment and said it would imminently start pumping gas into the equipment.
The announcement comes as six major powers are huddling behind closed doors in New York to review a draft UN Security Council resolution mandating sanctions against Iran over its refusal to halt its sensitive nuclear fuel work, which the West fears could be diverted to make a nuclear bomb.
The charge has been vehemently denied by Iran, which maintains that its nuclear programme is aimed solely at producing electricity.
The talks at Britain's UN mission in New York brought together ambassadors from the UN Security Council's five veto-wielding members -- Britain, China, France, Russia and the United States -- and Germany.
The focus was on a resolution crafted by Britain, France and Germany in consultations with Washington to penalise Tehran for failing to heed UN demands that it freeze uranium enrichment.
However, not all five veto-wielding members agree on the draft resolution. According to some diplomats, Washington had pressed for a tougher text, including a call for an end to Moscow's help building Iran's Bushehr nuclear power station.
But, Russian Foreign Minister Sergei Lavrov has rejected the proposed sanctions, arguing that they did not advance objectives agreed on earlier by the six powers.
The draft calls on UN member states to slap nuclear and ballistic missile related sanctions on Iran. It provides for a freeze on assets related to Iran's nuclear and missile programs as well as travel bans on nuclear and weapons scientists involved in those programs.
A top Iranian cleric, who preached Tehran's Friday sermon defied the UN over probable sanctions, calling again for a return to negotiations.
"If you want to go ahead with the sanctions, go ahead. You have imposed sanctions on us for the past 27 years. What did you gain? It was with these sanctions that Iranian youth reached nuclear energy and self sufficiency," said Ahmad Khatami in a challenging tone.
"You will lose more than us if you impose sanctions. Give up these kinds of games because your benefit is in what in what Iran has proposed," added Khatami, also a member of Assembly of Experts, a council that supervises the activity of Iran's leader.
"Saying it again, negotiating is the best way and we are negotiating from a position of power," he said, echoing Iranian officials call to return to talks.
He also took a swipe at the UN Security Council resolution 1696, which orders Iran to suspend its enrichment activities, "We don't want more than our right. The resolution passed by a gang is baseless, illogical, unfounded."