Iranian President Mahmoud Ahmadinejad, centre, listens to an explanation during a visit an exhibition of Iran's laser science in Tehran on Sunday. (Hamid Foroutan/ISNA/AP) Iran's president Mahmoud Ahmadinejad ordered his country's atomic energy agency on Sunday to begin the production of higher-enriched uranium.

The order from Ahmadinejad, announced during a live broadcast on state television, would raise Iran's uranium enrichment level from 3.5 per cent to 20 per cent.

Iran says it needs to refine its stockpile of low-enriched uranium to a higher purity to operate a medical research reactor in Tehran.

The United States fears Iran's nuclear program could be used to produce an atomic bomb but Iran says its program is for peaceful purposes.

While the 20 per cent threshold is substantially below the 90 per cent-plus needed to make fissile warhead material, any move by Iran to enrich to 20 per cent is raising concerns because it would bring Iran substantially closer to weapons capability.

Ahmadinejad's latest pronouncement on the long-running dispute coincided with a call by U.S. Defence Secretary Robert Gates for the international community to rally together to pressure Iran into abandoning its nuclear program.

"If the international community will stand together and bring pressure to bear on the Iranian government, I believe there is still time for pressure and sanctions to work," Gates said in Rome, where he met Sunday with Italian Defence Minister Ignazio La Russa.

The Iranian president said he decided to ramp up production because Western governments have balked at his proposal for a fuel exchange to keep the medical reactor operating.

Western powers see the potential swap as a means to ensure Tehran does not further enrich its uranium to make weapons, but Gates said he did not believe an agreement was close.

Iran and the West have been discussing a plan under which Iran would export its low-enriched uranium stocks for enrichment abroad.

The plan, which comes from the International Atomic Energy Agency, was first drawn up in early October at a meeting in Geneva between Iran and the six world powers. It was refined later that month in Vienna talks among Iran, the U.S., Russia and France.

With files from The Associated Press