Al-Alam television quoted a source from Iran's atomic body as telling the state-owned Arabic language channel that "Iran has started enriching uranium to 20 percent in the presence of IAEA (International Atomic Energy Agency) inspectors at Natanz."
Iran's English language Press TV too reported that Tehran has commenced enriching uranium to 20 percent.
The United States and France said on Monday they will push for "strong" new UN anti-nuclear sanctions against Iran after Tehran announced it was going to step up its enrichment of uranium.
Western powers are trying to convince Iran to sign up to an IAEA-brokered deal that envisages Tehran being supplied with nuclear fuel for its Tehran research reactor in exchange for its low-enriched uranium (LEU).
The deal has hit a roadblock as Tehran, although saying it is ready "in principle" to sign on to it, insists that not all its LEU be shipped out in one go as world powers are demanding.
Foreign ministry spokesman Ramin Mehmanparast on Tuesday left the door open for a deal, saying the stepped-up enrichment programme did not preclude a swap deal going ahead.
"Our preparation for 20 percent enrichment has got nothing to do with the swap. We are still ready for the swap if our requirements are met," he told reporters.
"If other countries or the IAEA meet our needs, maybe we can change our approach... the door is not closed yet. Anytime they (world powers) are ready, this (fuel deal) can be done."
Iran on Monday formally told the IAEA of its plan to produce high enriched uranium at Nantanz, sparking warnings by world powers of fresh sanctions against the Islamic republic.
Western powers led by Washington 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 entirely peaceful and that it specifically wants to process uranium to the 20 percent level to fuel the Tehran research reactor, which makes medical isotopes.
A French presidency official said that President Nicolas Sarkozy and US Defence Secretary Robert Gates had in talks in Paris on Monday "agreed that the time has come for the adoption of strong sanctions (against Iran), in the hope that dialogue will be resumed."
Gates, whose aides said earlier the United States would ask France to submit a sanctions motion at the UN Security Council, which it currently chairs, said: "We are very much agreed that action by the international community is the next step."
In Washington, a US official said Iran's high enrichment plan was "a provocative move in defiance of UN Security Council resolutions."
Ehud Barak, defence minister of Israel which is widely believed to be the Middle East's sole if undeclared nuclear-armed power, told a meeting of his Labour party that new sanctions were needed.
He said Tehran's enrichment decision was "further proof that Iran is deceiving the whole world and the correct response is to begin a determined campaign of decisive and permanent sanctions against Iran."
Neither the United States nor Israel has ruled out taking military action against Iran's nuclear facilities.
IAEA chief Yukiya Amano "noted with concern this decision, as it may affect, in particular, ongoing international efforts to ensure the availability of nuclear fuel for the Tehran research reactor," his agency said.
Iran's main enrichment facility is situated in the central city of Natanz where sensitive atomic work has continued for years despite three sets of UN sanctions.