US President Donald Trump said Iran was 'play with fire (Picture: PA).
The White House is again calling for Tehran to end its nuclear ambitions.
It is after the International Atomic Energy Agency confirmed Iran had breached the limit on its stockpile of low-enriched uranium set under the 2015 nuclear deal with world powers.
The US said its strategy of "maximum pressure" will continue, with President Trump saying Iran was "playing with fire".
It marks the first major departure from the unravelling agreement a year after the US unilaterally withdrew from the accord.
The announcement by Iran's foreign minister Mohammad Javad Zarif, and later confirmation by the UN nuclear watchdog, puts new pressure on European nations trying to save the deal amid President Donald Trump's campaign targeting Tehran.
Iran is also threatening to raise its uranium enrichment closer to weapons-grade levels on July 7 if Europe fails to offer a new deal.
It also further heightens tensions across the wider Middle East in the wake of Iran recently shooting down a US military surveillance drone, alleged attacks on oil tankers that America and the Israelis blame on Tehran, and bomb-laden drone assaults by Yemen's Iranian-backed rebels targeting Saudi Arabia.
The European Union urged Iran to reverse course and Israeli prime minister Benjamin Netanyahu called the action "a significant step toward making a nuclear weapon".
Iran long has insisted its nuclear programme is for peaceful purposes, despite Western fears about it.
Although Mr Trump pulled back from air strikes targeting Iran after the US drone was shot down, Washington has rushed an aircraft carrier strike group, nuclear-capable B-52 bombers and thousands of additional troops to the region.
That has raised fears that a miscalculation or further incidents could push the two sides into an armed conflict, 40 years after the Islamic Revolution and the takeover of the US embassy in Tehran.