The IAEA on Friday said in a statement it had also agreed with Tehran to finalise in early August a plan for monitoring the Natanz uranium enrichment plant and to clear up all its questions about the country's past plutonium experiments.

'First step'

Diplomats welcomed the announcement of the Arak inspection, which the IAEA said would take place before the end of July.

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"It is definitely positive that the agency inspectors can visit the site," one diplomat said. "This is good news."

"It is only a very first step, but a first step is better than nothing, although we will have to see where all this is going to get us," a second Western diplomat said.

Iran says its Arak research reactor, due to be completed in 2009, will make isotopes for medical and other peaceful uses, replacing an older 1970s light-water reactor in Tehran.

But Western powers, particularly the US and the UK, fear that Tehran wants to use plutonium, a by-product at the Arak heavy-water reactor, for the core of nuclear warheads.

Ali Asghar Soltanieh, Iran's envoy to the IAEA, confirmed inspections would take place at Arak and said that Iran saw completion of the reactor as its undeniable right, according to Iran's official IRNA news agency.

Last year the IAEA's governing board rejected Iran's request for technical aid for Arak.

In April, Iran stopped providing advanced design information on planned nuclear sites like Arak.

The UN Security Council has imposed two rounds of sanctions since December on Iran for failing to halt enrichment, a process which can produce fuel for power plants or material for warheads. A third sanctions resolution is being considered.