Raising doubts about its commitment to dispel international distrust, Iran (search) is producing significant quantities of a gas that can be used to make nuclear arms just days before it must stop all work related to uranium enrichment, diplomats said Friday.

Iran recently started producing uranium hexafluoride at its gas-processing facilities in the central city of Isfahan, the diplomats told The Associated Press.

When introduced into centrifuges and spun, the substance can be enriched to varying degrees. Low-grade enriched uranium (search) is used in nuclear power plants. Highly enriched uranium forms the core of nuclear warheads.

While Iran says it is only interested in enrichment to generate power, the United States and its allies accuse Tehran of wanting the technology to make weapons-grade uranium.

In the latest accusation, Secretary of State Colin Powell (search) said Wednesday he had seen intelligence to confirm claims by an Iranian dissident group that Tehran was secretly running a program intended to produce nuclear weapons by next year.

Iranian Foreign Minister spokesman Hamid Reza Asefi dismissed that allegation Friday.

"There is no place for weapons of mass destruction in Iran's defense doctrine," he said, according to the official Islamic Republic News Agency.

Asefi suggested that U.S. officials "reconsider their intelligence sources."

Iran last week agreed to suspend uranium enrichment and all linked activities in a deal worked out with Britain, France, Germany and the European Union. The deal, which goes into force Monday, prohibits Iran from all uranium gas-processing activities, as well as other programs linked to enrichment.

A senior EU diplomat said Iran's decision to carry out uranium processing right up to the freeze deadline disappointed the Europeans and cast doubt on Tehran's goodwill -- even if it did not violate the letter of the agreement.

It also appeared to bolster the U.S. effort to have the U.N. Security Council examine Tehran's nuclear activities. When the deal was announced last week, it looked to weaken the U.S. drive, even though the agreement commits Iran to suspension only while a comprehensive aid agreement with the EU is finalized.

Asked about quantities being processed at Isfahan, one of the diplomats said, "It's not little," but he declined to elaborate.

But another diplomat familiar with the International Atomic Energy Agency -- the U.N. nuclear watchdog -- said the Iranians apparently were in the process of converting 22 tons of uranium into gas, either as a precursor to uranium hexafluoride or as the finished product.

In Washington, U.S. State Department Deputy Spokesman Adam Ereli said the reports "only heighten our concerns that Iran continues to pursue nuclear activities and does not honor its commitments."

Iran has huge reserves of raw uranium and has announced plans to extract more than 40 tons a year.

That amount, if converted to uranium hexafluoride and repeatedly spun in centrifuges, could theoretically yield more than 200 pounds of weapons-grade highly enriched uranium, enough for about five crude nuclear weapons.

Iranian officials say the Isfahan plant can convert more than 300 tons of uranium ore a year.

Iran announced suspension of enrichment last week, and the agency said it would police that commitment starting next week, ahead of a Nov. 25 IAEA board meeting.

The main focus of that meeting is Iran, with Tehran and its allies pushing to close the books on an examination of nearly two decades of covert nuclear activities and the Americans seeking to keep open the option of Security Council involvement.

By opting to freeze -- and not scrap -- the enrichment program, Tehran has not dropped plans to run 50,000 centrifuges to enrich uranium for what it says will be the fuel requirements of a nuclear reactor to be finished next year.

Iran currently possesses fewer than 1,000 centrifuges. But even with 1,500 centrifuges, experts say Iran would be able to make enough weapons-grade uranium for about a bomb a year.