VIENNA (Reuters) - Iran has begun installing advanced centrifuges in its key uranium enrichment complex, accelerating activity that could give it the means to make atom bombs in future if it chooses, diplomats said on Thursday.

An Iranian soldier stands guard inside the Natanz uranium enrichment facility, 322km (200 miles) south of Iran's capital Tehran March 9, 2006.REUTERS/Raheb Homavandi

Iran says it wants to produce nuclear fuel only for electricity so it can export more oil. But has been hit with three sets of United Nations sanctions for hiding the work until 2003, failing to prove to inspectors since then that it is wholly peaceful, and refusing to suspend the disputed program.

Iran launched 3,000 centrifuges, a basis for industrial scale enrichment, in the underground Natanz production hall last year. But they are a 1970s-vintage design prone to breakdown so Iran began testing an advanced version in Natanz’s pilot wing.

After a pause of several months, Iran has now assembled more than 300 centrifuges divided into two cascades (interlinked networks) to expand beyond 3,000, diplomats with access to intelligence told Reuters.

“One of the two cascades is using the advanced model, the other the older one. There are more machines in the advanced cascade than the set of 164 typically used for the (older model),” said one of the diplomats, who asked for anonymity because the details remained confidential.

“Iran may not have had enough of the advanced one ready yet to put into two cascades. But they wanted to show the world they could go beyond the threshold of 3,000 now enriching at Natanz (despite international pressure) to stop.”

Analysts believe Iran aims to gradually replace its start-up “P-1” centrifuge with “a new generation” it adapted from a “P-2” design, obtained via black markets from the West and able to enrich uranium 2-3 times faster than its older counterpart.

Iran’s ambassador to the IAEA told Reuters he was unaware of new progress at the Natanz enrichment complex, which is ringed by anti-aircraft guns against a feared U.S. bombing.

The Vienna-based International Atomic Energy Agency, which has inspectors at Natanz, declined comment.

A senior diplomat familiar with the IAEA’s Iran mission did not dispute the disclosures but said it remained unclear if Iran could get the upgraded brand of centrifuge to work productively.

Centrifuges are technically temperamental tubes that spin at supersonic speed to refine uranium to levels suitable for power plants or bombs, depending on their configuration.

NEW CENTRIFUGES PASS QUALITY TESTS

The first diplomatic source said Iran had completed quality control checks on the newly installed advanced centrifuges and was ready to start feeding uranium gas into them for enrichment, but it was unclear when this process would begin.

“Iran has already done most of the necessary vacuum tests, including leakage checks, to make sure the (latest) centrifuges are in working order and to activate them,” he said.

“The two new cascades were installed to comply with a directive from President (Mahmoud) Ahmadinejad that on April 8, a date Iran has marked as National Nuclear Technology Day, a significant achievement would be displayed.”

Ahmadinejad used the same occasion a year ago to proclaim industrial enrichment capacity. But nuclear analysts said then, and still say, Tehran has yet to show it can run centrifuges in large numbers at optimal speed nonstop for long periods -- the key to yielding usable quantities of enriched uranium.

Still, a U.S. intelligence report in December said Iran would gain a latent ability to build atomic warheads between 2010 and 2015 merely by gradually expanding the program and mastering the technology.

The diplomats who reported Iran’s advanced centrifuge assemblies said they were meant to “state a fait accompli” that Tehran has no intention of suspending enrichment, as demanded by the U.N. Security Council, but rather of accelerating progress towards industrial production of fissile nuclear material.

The IAEA is also pressing Iran to explain Western intelligence alleging that it conducted secret studies into how to “weaponize” nuclear materials despite its membership of the Non-Proliferation Treaty. Iran says the information is forged.

Diplomats close to the IAEA said it was aiming to set up a meeting with a top Iranian nuclear official in Vienna in mid-April to have him address the intelligence fully.