TEHRAN, July 31: Iran has resumed building centrifuges which Washington says are intended to enrich uranium to weapons-grade for use in atomic warheads, Foreign Minister Kamal Kharrazi said on Saturday.

Iran's decision backtracks from a pledge made last year to the European Union's "big three" - Britain, France and Germany - to suspend enrichment-related activities.

"We have started building centrifuges," Kharrazi told a news conference.

Iran said it would restart making centrifuges to retaliate against a resolution from the UN nuclear watchdog last month that deplored Tehran's failure to co-operate fully with inspectors from the International Atomic Energy Agency (IAEA).

Diplomats say Iran has also restarted work at a uranium conversion facility near the central city of Isfahan.

This plant turns processed ore, or yellowcake, into uranium hexafluoride gas which is pumped into centrifuges to form enriched uranium.

During a meeting in Paris on Thursday, Iran told the EU "big three" that it would not surrender its right to proceed with uranium enrichment.

The IAEA says the enrichment suspension was meant to cover both centrifuge construction and the uranium conversion plant.

However, Mr Kharrazi gave assurances that Tehran had not resumed enriching uranium, the key part of the process which can either produce fuel for power stations or bomb material.

Iran insists it needs enriched uranium for power stations being built to meet booming domestic demand for electricity.

US Secretary of State Colin Powell warned Iran on Thursday that its case was increasingly likely to be referred to the sanction-imposing UN Security Council for failing to meet IAEA commitments.-Reuters