The United States, Russia and France on Tuesday said that Iran's escalation of its uranium enrichment further undermines international trust in its nuclear drive.

The three powers sent a letter to the International Atomic Energy Agency (IAEA) expressing new concern about Iran's actions and signalling new pressure on the Islamic state.

"If Iran goes forward with this escalation, it would raise concerns about Iran's nuclear intentions," said the joint letter, which has been circulated to member states and a copy of which was obtained by AFP.

"Iran's enrichment of its LEU (low-enriched uranium) stockpile to higher levels is not only unnecessary, but would serve to further undermine the confidence of the international community in Iran's actions," it said.

Iran announced on February 7 that it intended to start producing 20 percent enriched uranium for a medical research reactor, defying world powers who have warned of new UN sanctions unless Tehran halts its nuclear drive.

Western powers suspect Tehran is enriching uranium to make atomic weapons as the material in high purity form can be used in the fissile core of a nuclear bomb.

Iran insists its intentions are peaceful and that it needs 20 percent level uranium to fuel its Tehran research reactor. But powers fear Iran could move quickly from 20 to 90 percent enrichment -- the level needed to make weapons.

The West is trying to convince Iran to accept an IAEA-brokered deal that envisages Tehran being supplied with nuclear fuel for the reactor in exchange for its low-enriched uranium. Iran has so far refused to sign up.

Iran's announcement that it would enrich on its own and its "subsequent formal notification to the IAEA are wholly unjustified," the three countries wrote in the letter, dated February 12, to watchdog chief Yukiya Amano.

It was signed by French envoy Florence Mangin, Russian ambassador Alexander Zmeyevskiy and US ambassador Glyn Davies.

The moves "represent a further step toward a capability to produce highly enriched uranium."

The countries "recognise the need in Iran for medical radioisotopes," the letter continued.

But they said they believe "the IAEA's proposal would provide Iran with the most effective and timely mechanism" to refuel its research reactor and "begin to establish mutual trust and confidence."

"If Iran does not wish to accept the IAEA offer, we note that these are available on the world market and could be obtained as a responsible, timely and cost effective alternative to the IAEA's proposal," they said.

The letter, which has since been circulated to the IAEA's member states, was initially viewed by Iran as a new offer.

On Monday, Iran's atomic chief Ali Akbar Salehi said the three powers had made a new proposal. But the powers swiftly denied it.

On Tuesday, Iranian Foreign Minister Manouchehr Mottaki said the letter had "appeared" as a new offer when translated for the Islamic republic.

But Moscow, Paris and Washington insisted it contained nothing new.

They again regretted the fact Iran had not yet agreed to the IAEA proposal, drawn up on October 21 after days of intensive haggling.

The three countries said they "recognise Iran's need for assurances that the project would be fully implemented," referring to Tehran's fears that the deal might simply be a ruse to deprive it of its stock of low-enriched uranium.

But the ambassadors argued that powerful guarantees were built into the IAEA offer.

"The IAEA agreed to take formal custody of Iran's nuclear material," they said.

"We agreed to a legally binding project and supply agreement. We agreed to support technical assistance through the IAEA to ensure the safe operations of the research reactor," they said.

"We expressed our willingness to have Iran's low-enriched uranium placed in escrow in a third country until completion of the fabrication process. The United States offered substantial political assurances that the agreement would be fulfilled."