TEHRAN, Feb 27: Russia and Iran signed a nuclear fuel supply deal long opposed by Washington on Sunday, paving the way for Iran to start up its first atomic reactor next year.

The agreement, inked by the two countries' nuclear energy chiefs at the Bushehr atomic plant in southern Iran, came as Tehran faced heightened pressure from the United States, which accuses it of secretly developing nuclear weapons.

Iran, OPEC's second largest oil producer, denies the charge and has received strong backing from Moscow, which is keen to play a major role in expanding Iran's nuclear energy programme.

"This is a very important incident in the ties between the two countries and in the near future a number of Russian experts will be sent to Bushehr to equip the power station," Iranian state television quoted Alexander Rumyantsev, head of Russia's Federal Atomic Energy Agency, as saying.

A key part of the agreement obliges Tehran to repatriate all spent nuclear fuel to Russia. Moscow hopes this will allay US worries that Iran may use the spent fuel, which could be reprocessed into bomb-grade plutonium, to develop arms.

The International Atomic Energy Agency (IAEA), which has been probing Iran's nuclear programme for over two years, said it would also keep a careful eye on Tehran's use of the fuel.

Spokeswoman Melissa Fleming said inspectors would "monitor closely the use of the fuel and where it goes" as part of agency safeguards monitoring aimed at ensuring no nuclear materials are diverted to any covert weapons activities.

Rumyantsev said Bushehr would start operating in late 2006. "We are planning the physical launch at the end of 2006. About half a year before this the first delivery of fuel will take place," the Itar-Tass news agency quoted him as saying.

FUEL FROM SIBERIA: Iranian officials put the plant's launch about six months earlier in mid-2006. Diplomats in Tehran said they may have been referring to the reactor's initial test phase.