As Iran pursues a nuclear programme the West fears is aimed at producing bombs, Tehran also appears to be stepping up development of missiles capable of carrying atomic warheads, diplomats citing intelligence say.
According to an intelligence report given to Reuters by a non-US diplomat, a covert Iranian programme run by people closely linked to Iran's military includes plans to arm its Shahab-3 missiles, which experts believe have a maximum range of around 2,000 km (1,240 miles), with nuclear warheads.
The report, which could not be independently confirmed, surfaced as the United States and its allies seek to highlight the potential security dangers of a nuclear-armed Iran.
The report said it was code-named Project 111 and that the "aim is arming Shahab-3 missiles with nuclear warheads".
An Iranian official, who asked not to be named, denied the charge.
The assessment that Iran has nuclear ambitions for the Shahab-3 is shared by the European Union, Washington and Israel, said an EU diplomat who asked not to be named.
Tehran says it only wants nuclear power stations, not bombs. After three years of inquiries, UN inspectors have been unable to verify that Tehran's nuclear programme is purely peaceful.
An Iranian exile who has reported accurately on Tehran's nuclear programme in the past said Iran had significantly increased production of Shahab-3 missiles.
The International Atomic Energy Agency's board of governors met in Vienna on Monday to consider the latest IAEA report on Iran's nuclear programme. It will be sent to the UN Security Council, which could impose sanctions on Iran.
Project 111 was first mentioned last month in a report by the Washington Post, which described it as "a nuclear research effort that includes work on missile development". The Post said US officials believe it is the successor of Project 110, which they believe is the military arm of Iran's atomic programme.
German intelligence officials believe Iran has stepped up covert efforts to procure missile technology, said a German government official, who asked not to be named.
The intelligence officials are sending "early-warning letters" to German firms, urging them to be alert for Iranian agents hunting for missile technology, he said.
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