Iran says it has begun enriching uranium to a higher level, defying international efforts to curb its nuclear activity.
Iranian state media reports the process started at Iran's Natanz facility Tuesday in the presence of International Atomic Energy Agency inspectors.
Iran told the IAEA Monday of its plans to enrich uranium to 20 percent in order to fuel a medical nuclear reactor.
Western powers are concerned that if Iran is able to enrich uranium to 20 percent, it could eventually produce weapons-grade uranium through the same process.
Iran insists its nuclear program is only for peaceful purposes.
The U.N. Security Council has imposed three rounds of sanctions against Iran for its failure to halt uranium enrichment.
A U.S. Defense Department spokesman said Tuesday the United States wants a fourth round of sanctions passed "within weeks, not months."
Russia's national security chief Nikolai Patrushev said Iran's decision to boost uranium enrichment has raised doubts about the peacefulness of its nuclear program.
Russia has traditionally been reluctant to impose sanctions against Iran, but Russian officials recently have shown a willingness to take a tougher position toward the Islamic Republic.
In Paris Monday, U.S. Defense Secretary Robert Gates and French President Nicolas Sarkozy said they will push for strong new sanctions.
U.S. officials said they hope to bring a resolution to the Security Council this month, while France holds the rotating presidency.
The U.N. had brokered a deal with a group of world powers that called for Tehran to ship its uranium abroad for enrichment and have it returned as reactor fuel. But Iran had given mixed signals about its willingness to accept the deal.
A Chinese Foreign Ministry spokesman Tuesday called for the parties involved in the negotiations to continue work towards finding a solution.
China has been opposed to setting additional sanctions against Iran.