Iran has taken steps in recent weeks that bring it closer to launching uranium enrichment deep inside a mountain, diplomatic sources say, a move that would worsen its nuclear confrontation with the West.

Iran has said for months that it is preparing to conduct uranium enrichment at Fordow - a protected site deep underground where it says it wants to make material for a peaceful nuclear reactor - but it has yet to start.

The West suspects it of seeking the enriched uranium for a bomb, and wants it to halt the plans. Were Iran to begin production at the site, near the Shi'ite Muslim holy city of Qom, it could make it harder to revive nuclear talks that collapsed a year ago.

Western countries have imposed increasingly tight economic sanctions on Tehran over its nuclear program, culminating with a new law signed on New Year's Eve by U.S. President Barack Obama aimed at preventing buyers from paying for Iranian oil.

One Vienna-based diplomat said Iran was believed to have begun in late December feeding uranium gas into centrifuges as part of final preparations to use the machines for enrichment.

"They are close to being able to begin enriching," the diplomat said. "They have to do some experimenting and refining to get it right."

An official of another country said he believed Iran was carrying out "passivation", a technical step involving putting nuclear material into the centrifuges to prepare them tobe activated for enrichment.

"I would assume they could start if they wanted to," he said.

Apart from the technical question of preparing Fordow for launch, Iran would have to take a political decision to start enrichment there. Western capitals may be hoping that the latest sanctions, which are imposing real pain on the Iranian economy, would persuade Tehran to hold off.

Iran is already refining uranium to a fissile purity of 20 percent - far more than the 3.5 percent level usually required to power nuclear energy plants - above ground at another location.

It is moving this higher-grade enrichment to Fordow in an apparent bid to better protect the work against any enemy attacks. It also plans to sharply boost output capacity.

The machines and other equipment needed to start enrichment were installed at Fordow last year.

The United States and Israel, Iran's arch foes, have not ruled out strikes against the Islamic state's nuclear sites to prevent it from acquiring atomic arms. Iran says its nuclear program is peaceful, mainly for generating electricity.

Iran's mission to the International Atomic Energy Agency, the Vienna-based UN nuclear watchdog and the IAEA itself were not available for comment. U.N. inspectors regularly visit
Iranian nuclear facilities, including the one at Fordow, and track developments there.

Iran, which sees its nuclear program as a source of power and prestige, has in the past publicly announced significant technical advances, including its decision in early 2010 to start refining uranium to 20 percent.

Iran disclosed the existence of Fordow to the IAEA only in September 2009 after learning that Western intelligence agencies had detected it.
Tehran says it will use 20 percent-enriched uranium to convert into fuel for a research reactor making isotopes to treat cancer patients, but Western officials say they doubt that the country has the technical capability to do that.

In addition, they say, Fordow's capacity - a maximum of 3,000 centrifuges - is too small to produce the fuel needed for nuclear power plants, but ideal for yielding smaller amounts of high-enriched product typical of a nuclear weapons program.

An IAEA report in November said Iran had installed two networks of 174 centrifuges each at Fordow. Centrifuges spin at supersonic speeds, which enriches uranium by increasing the concentration of heavier, fissile isotopes.

Nuclear bombs require uranium enriched to 90 percent. But Mark Fitzpatrick, a nuclear expert at the International Institute for Strategic Studies think tank, said most of the work would be complete once it reached 20 percent purity.

"By the time the uranium is enriched to 20 percent, nine-tenths of the effort to reach weapons grade has been expended," Fitzpatrick wrote in a paper.

Western experts give different estimates of how quickly Iran could assemble a nuclear weapon if it decides to do so - ranging from as little as six months to a year or more.