Iran has begun uranium enrichment at an underground site built to withstand possible air strikes, a leading hardline newspaper has reported.

The operations at the bunker-like Fordo facility south of Tehran, reported by the Kayhan newspaper, are small compared with Iran's main enrichment site. But the centrifuges are considered more efficient and are shielded from aerial surveillance and protected against air strikes by up to 90 metres of mountain rock.

Uranium enrichment is at the core of the international standoff over Iran's nuclear programme. The US and its allies fear that Iran could use its enrichment facilities to develop high-grade nuclear material for warheads. Iran claims it only wants nuclear reactors for energy and research.

The Kayhan, which is close to Iran's ruling clerics, said engineers had begun injecting uranium gas into sophisticated centrifuges at the Fordo facility near the city of Qom.

"Kayhan received reports yesterday that show Iran has begun uranium enrichment at the Fordo facility amid heightened foreign enemy threats," the newspaper said in a front-page report. Kayhan's manager is a representative of Iran's supreme leader, Ayatollah Ali Khamenei, who has the final word on all important matters of state.

Iran's nuclear chief, Fereidoun Abbasi, said on Saturday that his country would soon begin enrichment at Fordo.

Iran has a major uranium enrichment facility in Natanz where nearly 8,000 centrifuges have been operating since 2006.

The country has been enriching uranium to less than 5% for years but began raising this to nearly 20% from February 2010, saying it needed the higher grade material to produce fuel for a Tehran reactor that makes medical radioisotopes for cancer patients. Weapons grade uranium is usually about 90% enriched.

Iran says enrichment to nearly 20% will be carried out at Fordo. This is of particular concern to the west because such a concentration can be converted much more quickly for use in a nuclear warhead.

Built next to a military complex, Fordo was long kept secret and only acknowledged by Iran after it was identified by western intelligence agencies in September 2009. It is a hardened tunnel protected by air defence missiles and the Revolutionary Guard.

Abbasi was quoted as saying: "The Fordo facility, like Natanz, has been designed and built underground. The enemy doesn't have the ability to damage it."

A senior commander of the Revolutionary Guard said Tehran's leadership had decided to order the closure of the Strait of Hormuz, a strategic oil route, if the country's petroleum exports were blocked. Revolutionary Guard ground forces have staged war games in eastern Iran in an apparent display of resolve against US forces across the border in Afghanistan.

"The supreme authorities … have insisted that if enemies block the export of our oil, we won't allow a drop of oil to pass through the Strait of Hormuz. This is the strategy of the Islamic Republic in countering such threats," Ali Ashraf Nouri was quoted as saying by another newspaper, the Khorasan daily.

The US has delayed implementing its new sanctions for at least six months for fear of sending the price of oil higher at a time when the global economy is struggling. But there have been a series of threats from Iranian officials about closing the Strait of Hormuz.

In an interview broadcast on Sunday, the US defence secretary, Leon Panetta, said Iran was laying the groundwork for making nuclear weapons one day, but was not yet building a bomb.