The U.N.'s nuclear watchdog agency says it is becoming “increasingly concerned” that Iran is secretly developing a nuclear payload for a missile.

The assessment is in an International Atomic Energy Agency report circulated to the media on Friday.

The Associated Press says the agency cited “member states” that had provided credible and comprehensive information concerning Tehran's nuclear activities.

The report also says Iran has begun installing equipment to enrich uranium at an underground bunker.

The U.N. and western nations have imposed a series of sanctions on Iran for its refusal to halt uranium enrichment — a process that can lead to the production of weapons-grade material. However, Iran says its nuclear program is for peaceful purposes.

On Monday, Iran said it would not stop enriching uranium but was ready to cooperate with the IAEA — provided the agency limited its demands.

Iran's state-run IRNA news agency quoted energy chief Fereidoun Abbasi as saying Tehran would answer some new questions concerning its nuclear activities, but would not answer “thousands of questions.”