VIENNA (AFP) - Iran is making significant progress in expanding its nuclear programme, including in opening up a potential second route to developing the bomb, a new UN atomic agency report showed on Wednesday.

The International Atomic Energy Agency's latest quarterly update said that Teheran has accelerated the installation of advanced uranium enrichment equipment at its central Natanz plant.

It also outlined further progress at a reactor under construction at Arak, also in central Iran, which Western countries fear could provide Iran with plutonium if the fuel is reprocessed.

The US State Department said the report was an "unfortunate milestone" marking a decade of Iran expanding its nuclear activities "in blatant violation of its international obligations".

Highly enriched uranium and plutonium can both be used in a nuclear weapon.

North Korea used plutonium in two tests in 2006 and 2009, while uranium was used in the "Little Boy" atomic bomb dropped by the US on Hiroshima, Japan in 1945.

The new IAEA report, seen by AFP, said Iran has installed at Natanz almost 700 IR-2m centrifuges and/or empty centrifuge casings, compared with just 180 in February. None was operating, however.

Iran has said it intends to install around 3,000 of the new centrifuges at Natanz - where around 13,500 of the older models are in place - enabling it to speed up the enrichment of uranium.

The UN Security Council has passed numerous resolutions calling on Iran to suspend all enrichment and heavy water activities - of the kind under development at Arak - and has imposed four rounds of sanctions.

Last year additional unilateral US and EU sanctions targeting Iran's oil exports and its financial system began to cause real problems for the Persian Gulf country's economy.

Israel, the Middle East's sole if undeclared nuclear-armed state, has refused to rule out military action against Iran, as has US President Barack Obama. Iran says that its atomic activities are peaceful.

Diplomatic efforts to resolve the impasse, most recently in six-power talks with Iran in Kazakhstan in April, have failed to make concrete progress.

Despite developments at Natanz, the IAEA report noted that Iran has not started operating any new equipment at its Fordo facility, built under a mountain near the holy city of Qom.

Fordo is of more concern to the international community, since it is used to enrich uranium to fissile purities of 20 per cent and Natanz mostly to five per cent, technically much closer to the 90-per cent level needed for a bomb.

The IAEA report showed that Iran has produced so far 324kg of 20 per cent enriched uranium, 44kg more than three months ago, but that 140.8kg have been diverted to fuel production, up from 111kg.

Experts say that around 240-250 kg are needed for one bomb.

At the research reactor under construction at Arak, meanwhile, which Iran says will start operating in the third quarter of 2014, the IAEA said that the plant's large reactor vessel "has been received but ... yet to be installed".

But the agency also "observed that a number of other major components had yet to be installed, including the control room equipment, the refuelling machine and reactor cooling pumps." Iran had not provided the IAEA with updated design information for the IR-40 reactor at Arak since 2006, the IAEA added, saying this was "urgently required".

"This is important because the reactor could be used to produce enough weapons grade plutonium for one weapon a year," Mark Fitzpatrick, analyst at the International Institute for Strategic Studies, told AFP.

The IAEA is meanwhile also trying to press Iran to provide access to documents, sites and scientists involved in what it suspects were research activities, mostly in the past but possibly ongoing, towards developing the bomb.

At one of these sites, the Parchin military base near Teheran, the new IAEA report said that in addition to months of activity levelling the area that the agency wants to inspect, Iran has now covering a "significant proportion" with asphalt.

"I don't think they are doing themselves any favours," one senior official familiar with the probe said, adding that some rubble from the site had been dumped in lakes.