Diplomats in Vienna say Iran has started uranium enrichment at a facility where the material can be upgraded quickly for potential use in a nuclear bomb.

The diplomats close to the international monitoring of nuclear programs said Monday that Iranian centrifuges were refining uranium to a purity of 20 percent at the underground Fordo complex near the Shi'ite holy city of Qom. The report increases international concerns that Iran is developing an atomic weapons program. Iran says its nuclear ambitions are peaceful.

The Fordo complex is located beneath a mountain and is better protected from potential air strikes by nations opposed to the Iranian nuclear program. Iran said previously it was preparing to move its highest-grade enrichment work to Fordo from its an above-ground complex in the central city of Natanz.

Iran says its nuclear program is designed only to generate electricity and material for medical research. Most of the work at the Natanz facility has involved refining uranium to a relatively low purity of 3.5 percent. Enrichment to the 20 percent level at the Fordo complex could reduce the time needed for Iran to further refine the material to the 90 percent purity required for nuclear weapons.

The United States and its ally Israel have not ruled out military action to stop the program, which they suspect is aimed at developing a capability to produce nuclear weapons. Israel sees a nuclear-armed Iran as a threat to the Jewish state's existence.

In a television interview broadcast Sunday, U.S. Defense Secretary Leon Panetta said Iran's nuclear program has not progressed to the stage of building a nuclear bomb. But he warned Iranian leaders that if they take such a step, the United States will stop them.

Panetta said Washington will continue what he called a “responsible” approach of putting diplomatic and economic pressure on Iran to abstain from developing nuclear weapons. He also advised Israel not to take unilateral action against Iran, saying a “better approach” is to “work together” with the United States on the issue.