"Iran has failed to meet its obligations under its safeguards agreement with respect to the reporting of nuclear material, the subsequent processing and use of that material and the declaration of facilities where that material was stored and processed", according to a confidential report obtained by the British news agency "Reuters" on Friday.

In its first reaction to the report, the United States said on Friday that Iran's nuclear program was "deeply troubling" and called on Iran to make a full disclosure of the program to international inspectors.

But Tehran immediately objected to the report, saying it has done nothing in violation of international obligations.

"We have answers for all the points mentioned in this news. We have done nothing which violates our commitments", Mr. Hamid Reza Asefi, Iranian Foreign Affairs Ministry’s senior spokesman told Reuters.

Tehran insists that its nuclear projects are for peaceful purposes, mostly for producing electricity, an argument that is rejected by Iranian and international experts, pointing out that in this case, why not using natural gas, as Iran is the world’s largest reserves after Russia.

"Although the quantities of nuclear material involved have not been large...the number of failures by Iran to report the material, facilities and activities in question in a timely manner as it is obliged to do pursuant to its Safeguards Agreement is a matter of concern", the report said.

State Department spokesman Richard Boucher said: "We think the report and Iran's programs themselves are deeply troubling and need to be studied carefully by all members". 

He declined to discuss details of the report's contents or speculate about what action the board should take. "I'm not predicting any specific action at this point. We will look at the report together with other members of the board ... and then we'll decide together what might be appropriate at that time when we get together". he said. 

Boucher said: "This report can provide important insights into the nature of the Iranian nuclear program and the problems that exist concerning Iran's safeguard obligations. "We strongly support the efforts of the International Atomic Energy Agency and its director general in Iran. We call on Iran to disclose all aspects of its nuclear program."

Speaking to the Persian service of the BBC on Friday, she said that since the last visit of the Agency’s Director Mohammad el-Brade’i on February, IAEA’s inspectors had carried out several other inspections on Iran atomic sites.

But she did not say how many inspections and if they included the uranium enrichment facilities Iran had built in Natanz and in Arak, in central Iran, without informing the IAEA.

Iran’s lamed President Mohammad Khatami admitted that his country had developed uranium enrichment technology and has constructed two sites in Natanz and in Arak for enriching uranium to be used in atomic power plants.

Mr. Khatami’s revelation came after the United States had confirmed information released earlier by the Baghdad-based Mojahedeen Khalq Organisation (MKO) on the plants.

However, the report, which is to be examined in the meeting of the Agency's Board of Governors on 16 June, said Iran was taking steps to rectify the situation.

Iran, with the help of Russia, is finishing the construction of its first nuclear-powered electrical plant in the port of Booshehr, on the Persian Gulf and is intending to build at least five more.

Washington, which like Israel, accuses Iran of trying to develop nuclear weapons under the guise of building electricity-generating reactors, has urged the IAEA to openly declare that the Islamic Republic is building nuclear facilities for military purpose, something that Mr. El-Brade’i, the Egyptian Head of the Agency has refused to do.

The United States in also urging Russia to put an end to its nuclear cooperation with Tehran, but Moscow also insists that the Booshehr plant is for civilian purposes and all of Iran’s atomic projects are under international control.

The IAEA said steps were being taken to bring Tehran into compliance with its safeguards agreements, which aim to ensure nuclear materials and facilities in states that sign the Nuclear Non-Proliferation Treaty (NPT) do not end up in secret nuclear weapons programs.

Last month, diplomats told Reuters el-Barade’i would tell the governors that Iran had committed minor violations of the NPT.

Diplomats say they suspect Iran may have undeclared uranium and that it may also have tested uranium-enrichment systems using this nuclear material without telling the IAEA.

"This would probably be a violation of the NPT", the noted.

In his 9 February declaration, Mr. Khatami said Iran had discovered new uranium reserves in Sarand area, near his hometown of Yazd. ENDS IAEA IRAN REPORT 6603