A confidential report by the United Nations nuclear agency, the International Atomic Energy Agency (IAEA), has found that Iran already has the technical know-how to produce a nuclear bomb.
But the head of the IAEA is playing down the findings.
Excerpts of the report, based on intelligence sources inside and outside Iran and the IAEA's own assessments, have been published on the website of the Institute for Science and International Security.
The authors emphasise their findings are yet to be confirmed.
But the report assesses that Iran already has "sufficient information to be able to design and produce a workable implosion nuclear device", which would use highly enriched uranium as the fuel.
It says various documents suggest that Iran, in early 2002, formally declared the start of its warhead development program.
It says the aim was to develop a nuclear payload which could be fitted inside and delivered using the existing Shahab 3 missile - one of the missiles tested controversially, only last week.
The US ambassador to the UN, Susan Rice, will not comment on the specific findings, but she has told the American NBC network that every effort must be made to stop a nuclear-armed Iran.
"We share concern that Iran with nuclear weapons would pose a grave threat to US national security and the security of allies and partners in the region," she said.
Ms Rice says Iran faces a stark choice - to give up all nuclear weapons development, or face the toughest sanctions so far.
"There are those that we might pursue multilaterally in the context of the Security Council," she said.
"There are others that we could do with partners in Europe and elsewhere. And then there are those that we can take by ourselves unilaterally."
The report came as Iran granted permission for IAEA inspectors to visit its newly revealed second uranium enrichment plant at Qom later this month.
The clandestine plant has heightened fears in the West that Iran is trying to develop a nuclear bomb - and it was the main talking point at last week's meeting of the permanent members of the UN Security Council and Germany.
IAEA chief Mohammed El Baradei has welcomed Iran's move, but questions the reliability of his own agency's report.
He is still upbeat about the chances of resolving the nuclear dispute with Iran through diplomatic means.
"I see that we are at a critical moment. I see that we are shifting gears from confrontation into transparency and cooperation," he said. ------------------------------------------------- Sounds about as believable as the UN climate change scare. Dave R.
