The news prompted strong reactions from the US and France on Friday, two of the powers pushing for sanctions amid fears that Iran's real aim is to make nuclear weapons.
Iran confirmed on Wednesday that it had installed new equipment to step up uranium enrichment, and would imminently start pumping gas into it.
An Iranian official told the news agency: "The second cascade was set up two weeks ago and this week gas was injected in them. We have the product of the second cascade."
George Bush, the US president, said the international community needed to work harder to stop Tehran from acquiring a nuclear weapon, and Jacques Chirac, the French president, said the time may have come for sanctions.
Bush said: "It says to me that we must double our effort to work with the international community to persuade the Iranians that there is only isolation from the world if they continue working forward on such a programme.
"It's unacceptable to the United States, and it's unacceptable to nations we are working with in the United Nations to send a common message to Tehran."
Sensitive fuel work
Tehran's announcement came as six major powers met behind closed doors in New York to review a draft UN Security Council resolution mandating sanctions against Iran over its refusal to halt its sensitive nuclear fuel work.
Iran denies it has a nuclear weapons programme, maintaining that the project is aimed solely at producing electricity.
The UN talks brought together ambassadors from the Security Council's five veto-wielding members - Britain, China, France, Russia and the US - and Germany.
The focus was on a resolution crafted by Britain, France and Germany in consultations with Washington to penalise Tehran for failing to heed UN demands that it freeze uranium enrichment.
Reacting to the news from Iran, Chirac said sanctions should be imposed if there is a stalemate in dialogue.
"I hope that we can find a solution through dialogue," he said during an official visit to China.
Chirac said: "If it goes on and appears that the dialogue will not end, then it is probably necessary to find calibrated, adaptable, temporary and reversible sanctions that will be imposed to show Iran that the entire international community does not understand their position and is hostile to it."
The French president said he had "never been a great believer in sanctions" and that he "has never been convinced of their effectiveness.
"In this particular case, it is obvious and the entire international community recognises this, notably China, but also Russia, the Europeans and the United States, that the ambitions clearly signalled by Iran are not compatible with the idea we are making concerning non-proliferation."
According to some diplomats, the US had pressed for a tougher draft resolution, including a call for an end to Moscow's help building Iran's Bushehr nuclear power station.
On Friday, Russia's defence minister, however, said the doubling of Iran's capacity to enrich uranium was not a cause for concern.
"I don't share concerns on this account," Sergei Ivanov said, highlighting that a second network of centrifuges launched by Iran was under supervision of the International Atomic Energy Agency.
"It's premature to talk of uranium enrichment or of military uranium."
For his part, Sergei Lavrov, Russia's foreign minister, has rejected the proposed sanctions, arguing that they do not advance objectives agreed earlier by the six powers.
The draft calls on UN member states to slap nuclear and ballistic missile-related sanctions on Iran.
It provides for a freeze of assets related to Iran's nuclear and missile programmes and travel bans on scientists involved in those programmes.
A top Iranian cleric who delivered Tehran's Friday sermon defied the UN over probable sanctions, calling again for a return to talks.
"If you want to go ahead with the sanctions, go ahead. You have imposed sanctions on us for the past 27 years. What did you gain? It was with these sanctions that Iranian youth reached nuclear energy and self-sufficiency," said Ahmad Khatami.
Tehran has so far conducted small-scale enrichment at Natanz in central Iran, feeding UF6 gas into a single 164-centrifuge cascade.