"We have started enriching uranium to the 3.5 percent level," Aghazadeh said in a televised speech, revealing that Iran's main nuclear facility in Natanz in central Iran had started working on Monday.

The senior Iranian official also said that the success in producing low-grade enriched uranium would pave the way for Iran to start industrial-scale production, adding that efforts were underway to expand the operations of the centrifuges.

"To start industrial-scale production, we should operate 3,000 centrifuges by the end of this (Iranian) year (which ends in March 2007)," said Aghazadeh, who serves as chairman of Iran's Atomic Energy Organization.

Earlier, senior Iranian official and former president Hashemi Rafsanjani told the Kuwait News Agency that Iran had operated the first unit of 164 centrifuges and successfully enriched uranium.

Meanwhile, Iranian President Mahmoud Ahmadinejad said on Tuesday Iran would "join the world club of nuclear technology soon", the state television reported.

"Iran will soon join the club of countries that have nuclear technology," the president told a gathering at Iran's northeastern city of Mashhad.

Iran announced the successful production of enriched uranium just one day before head of International Atomic Energy Agency (IAEA) Mohamed ElBaladei's planned visit to Iran.

ElBaladei's schedule visit has been viewed as a last-ditch effort to ease the escalating Iranian nuclear crisis. The UN Security Council on March 29 adopted a presidential statement that urges the Islamic Republic to re-suspend all activities related to uranium enrichment in 30 days, but Iranian ranking officials have repeatedly voiced the country would never compromise.

Enrichment is the process for manufacturing fuel for civil nuclear power devices but can also be used to build an atomic bomb. The United Sates accuses Iran of developing nuclear weapons secretly, but Iran says that its nuclear program is fully peaceful, vowing not to give in under pressure.