Iran's controversial nuclear programme has been heavily criticised by Western nations, especially the United States, who have said that Tehran could be planning to build atomic weapons.

Iran has repeatedly rejected the accusations saying that the programme is simply aimed at meeting the country's energy needs.

Power plants

Ahmadinejad said that the next step in the country's nuclear progress was to build power plants without help from foreign countries.

Iran is currently completing, with Russian help, a nuclear power plant with in Bushehr, in southern Iran, but the uranium fuel to power it will be imported.

Tehran also plans to build a 360-megawatt light-water nuclear power plant in Darkhovin, in the southwestern Khuzestan province, which it will power with its own fuel.

Ahmadinejad has announced several times in the past that Iran has the knowledge necessary to produce its own uranium oxide fuel, but with the opening of a new facility near the city of Isfahan, Tehran says it now has the capability on a large scale.

Bargaining position

Saeed Leilaz, an Iranian political analyst, said that the apparent advance could strengthen Iran's bargaining position in any future talks.

"By inaugurating the Isfahan facility, Iran will have the upper hand in future talks. It is not only a technical achievement but also a far more political gain. It is a winning card in Iran's hands," he said.

Ahmadinjad said at the inauguration of the facility in Isfahan that Iran was preparing new proposals for negotiations over the nuclear programme because "conditions have changed".

Western nations have tried to persuade Tehran to drop its uranium enrichment activities by offering a package of nuclear technology incentives linked to its energy programme in return.

The uranium oxide fuel being produced in Isfahan would have to be further developed before it could be used in a weapons, unlike the enriched uranium IRan is working in Natanz.