Iran's nuclear chief has said that Iran will use 20%- enriched uranium to produce nuclear fuel solely for domestic purposes.

Under the supervision of the International Atomic Energy Agency (IAEA) inspectors Iran started on Tuesday injecting gas into a cascade of centrifuges to enrich uranium to the purity level of 20% to produce fuel for its Tehran research reactor.

"Once Iranian experts enrich uranium to the purity level of 20%, they will turn it into fuel plates at Isfahan's Uranium Conversion Facility (UCF) and the plates will then be sent to Tehran to be used in the research reactor," head of the Atomic Energy Organization of Iran Ali Akbar Salehi said on Wednesday.

"The 20-percent enriched uranium will be for domestic use," he said, dismissing speculations that Iran could export the excess nuclear fuel.

Salehi said Iran was capable of producing up to 5 kg of nuclear fuel monthly, while the Tehran research reactor needs only 1.5 kg fuel each month.

According to various sources, the Islamic Republic has over 8,000 centrifuges and has amassed about 1.8 tons of low-enriched uranium.

Iran's decision to produce 20%-enriched uranium domestically in defiance of three sets of previously imposed international sanctions fueled appeals from the West for tougher UN Security Council sanctions against the Islamic Republic.

Western powers suspect Iran of aiming to build a nuclear weapon. The Islamic Republic has consistently said its program is designed toward the peaceful generation of power.

In a sign that Russia, a traditional Iranian ally, is moving closer and closer to the position of Western nations, the Russian Foreign Ministry said on Tuesday it was "disappointed" by Iran's decision to enrich uranium to 20%.

The ministry's statement was followed on Tuesday by remarks made by Russia's security chief Nikolai Patrushev, who said that Iran's move created doubts about the peaceful nature of the country's nuclear program.