Iran is still only operating several hundred centrifuges at its uranium enrichment plant outside the city of Natanz, despite its claims to have activated 3,000 of the devices, the head of the U.N. nuclear watchdog agency said Thursday.

Iranian President Mahmoud Ahmadinejad announced Monday that the Natanz facility had begun "industrial-scale" production of nuclear fuel in a major advance in Iran's uranium enrichment program, which the United Nations has demanded be halted.

Iran's top nuclear negotiator said that workers had begun injecting uranium gas into a new array of 3,000 centrifuges, a large jump over the 328 centrifuges that had been known to be operating at Natanz. Iran ultimately aims to operate more than 50,000 of the devices at the site.

Mohammed ElBaradei, head of the International Atomic Energy Agency, played down the extent of Tehran's progress.

"Iran is still just at the beginning stages in setting up its Natanz enrichment facility. The talk of building a facility with 50,000 centrifuges is just at the beginning, and it is (currently) only in the hundreds," ElBaradei told reporters in the Saudi capital, Riyadh.

He also downplayed suspicions that Iran is running a hidden uranium enrichment program.

"It has not been demonstrated until now that there are underground nuclear facilities in Iran working covertly, and Iran doesn't have the material that can be used to make a nuclear weapon," ElBaradei said.

But he voiced concern over Iran's nuclear program, saying it was "complicated." He also demanded that Iran show transparency to reassure the international community that its program was for peaceful purposes. The United States and its allies accuse Iran of seeking to develop nuclear weapons, a charge Tehran denies.

IAEA inspectors visited Natanz a week ago. Two more IAEA inspectors arrived in the country on Tuesday and are due to view the facility in a few days.

International officials and experts have pointed out that Iran has had difficulty keeping its smaller arrays of 328 centrifuges operating constantly. Experts said 3,000 centrifuges in theory would be enough in theory to develop a warhead in about a year.

Diplomats in Vienna familiar with the IAEA probe told The Associated Press that Iran was running only about 650 centrifuges in series -- the configuration that allows the machines to spin uranium gas to various levels of enrichment. And they said the machines were running empty, with none producing enriched uranium.

But Iran's announcement was a strong show of defiance to the United Nations, which has imposed sanctions on Iran for its refusal to suspend enrichment and has warned of more to come.

In the enrichment process, uranium gas is injected into cascades of thousands of centrifuges, which spin and purify it. If enriched to a low level, the result is fuel for a nuclear reactor. To a much higher level it can build the material for a nuclear warhead.

Also Thursday, ElBaradei expressed support for a proposal by the six members of the Gulf Cooperation Council to jointly run a peaceful nuclear program. The Gulf Arab nations announced in December that they had commissioned a study on setting up the program.

IAEA plans to send a delegation of experts to the Gulf next month to do surveys and field work for the study, which will look at the feasibility of building the facility, the nature of its peaceful use and ways of ensuring compliance with international safety regulations, said ElBaradei.

The GCC's nuclear bid appears to be in response to Iran's progress. Gulf and other Arab leaders have expressed unease with Iran's nuclear program and worry over the repercussions of a possible U.S. military action against it.