VIENNA - U.N. nuclear inspectors recently counted nearly 200 advanced machines fully or partially installed at Iran's main uranium enrichment site, the International Atomic Energy Agency reported Thursday, confirming diplomats' accounts that Tehran has begun a major upgrade of a program that can be used to make atomic arms.

Iran denies it wants such weapons and says it is enriching only to make reactor fuel and for scientific and medical purposes.

But because it hid its enrichment program - and other nuclear activities - for decades, many countries fear that Tehran ultimately wants to enrich to weapons-grade level, suitable for arming nuclear warheads. Despite U.N sanctions and Security Council demands for a halt in enrichment, Iran has expanded the activity.

The IAEA also has failed to relaunch an investigation into allegations that Iran worked secretly on components of a nuclear weapons program.

Noting a years-long lack of progress, the report said that without Iranian "engagement," the IAEA will be unable to resolve concerns that "need to be clarified to exclude the existence of possible military dimensions to Iran's nuclear program."

Iran announced in January that it planned to upgrade its Natanz enrichment facility, then said earlier this month that it had started doing so. On Wednesday, diplomats told The Associated Press that upward of 100 enriching centrifuges had already been installed.

However, the IAEA report, circulated Thursday to the 35-nation agency board, was the first independent, on-record confirmation that the work had begun and was advancing. The report, which was leaked to news media, said IAEA inspectors saw 180 of the high-tech IR-2m centrifuges fully or partially mounted at Natanz during a Feb. 6 inspection tour.

The advance is significant both in terms of technology and timing. The IR-2ms can enrich three to five times faster than the outmoded machines now being used at Natanz. For nations fearing that Iran may want to make nuclear arms that would mean a quicker way of getting there.

The start of the upgrade is also of concern to six world powers preparing to resume talks with Iran about its nuclear program on Tuesday in Kazakhstan. They want Tehran to cut back on enrichment - but the installation of new machines instead signals that the Islamic Republic has no intention of doing so.

Israel - which sees Iran's nuclear program as an existential threat that must be stopped by all means, including a military strike - was quick to condemn the Iranian advance.

The report's findings "prove that Iran continues to advance quickly to the red line" that Israel considers intolerable, said a statement from Prime Minister Benjamin Netanyahu's office, adding: "Iran is closer than ever to achieve enrichment for a nuclear bomb."