Reactor building of the Bushehr nuclear power plant, 1,000 km south of Tehran (Picture: PA).
Iran has begun enriching uranium to 4.5% - breaking the limit set by its 2015 nuclear deal with world powers, semi-official news agencies in the country reported.
The acknowledgement by the spokesman of the Atomic Energy Organisation of Iran comes a day after Iran pledged to break the deal's limit of 3.67%.
The decision to ramp up uranium enrichment came less than a week after Iran acknowledged breaking the 300-kilogram limit on its low-enriched uranium stockpile.
Experts warn higher enrichment and a growing stockpile could begin to narrow the one-year window Iran would need to have enough material for an atomic bomb, something Iran denies it wants but the deal prevented.
The future of the accord that President Donald Trump unilaterally pulled the US from a year ago remains in question.
While Iran's recent measures to increase enrichment and break its low-enriched uranium stockpile limit could be easily reversed, Europe has struggled to respond, even after getting a 60-day warning that the increase was coming.
Meanwhile, experts fear a miscalculation in the crisis could explode into open conflict, as President Trump already has nearly bombed Iran over Tehran shooting down a US military surveillance drone.
President Trump warned Tehran on Sunday that "Iran better be careful".
He did not elaborate on what actions the US might consider, but he told reporters: "Iran's doing a lot of bad things."
Iran has been closely monitored by inspectors from the International Atomic Energy Agency, the UN's nuclear watchdog.
"We are aware of Iran's announcement related to its uranium enrichment level," the agency said. "We are in the process of verifying this development."
Enriched uranium at the 3.67% level is enough for peaceful pursuits but is far below weapons-grade levels of 90%.
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The semi-official news agencies ISNA and Fars reported the 4.5% enrichment figure, citing Behrouz Kamalvandi, a spokesman for Iran's nuclear agency.
Mr Kamalvandi separately hinted in a state television interview aired on Monday that the country might consider going to 20% enrichment or higher as a third step, if the material is needed.
That would worry nuclear nonproliferation experts, as 20% is a short technical step away from reaching weapons-grade levels of 90%.
Mr Kamalvandi also suggested using new or more centrifuges, which are limited by the deal.
Foreign Ministry spokesman Abbas Mousavi on Monday said Iran appreciated the efforts of some nations to save the deal, but offered a jaded tone on whether Tehran trusted anyone in the negotiations:
"We have no hope nor trust in anyone nor any country but the door of diplomacy is open."
Tensions began rising in May when the US rushed thousands of additional troops, an aircraft carrier, nuclear-capable B-52 bombers and advanced fighter jets to the Middle East.
Mysterious oil tanker blasts near the Strait of Hormuz, attacks by Iranian-backed rebels in Yemen on Saudi Arabia and Iran shooting down a US military drone have raised fears of a wider conflict engulfing a region crucial to global energy supplies.