Marc Vidricaire, a spokesman for the International Atomic Energy Agency (IAEA), told Al Jazeera on Friday that Tehran had notified the body of the second enrichment plant's existence in a letter earlier this week.
Iran was previously known to have one enrichment plant at Natanz, in central Isfahan province, which is under daily surveillance by IAEA inspectors.
"On 21 September, Iran informed the IAEA in a letter that a new pilot fuel enrichment plant was under construction in the country ... the enrichment level would be up to five per cent", Vidricaire said.
Obama said that the new facility "demonstrates Iran's continued unwillingness to meet its obligations under UN Security Council resolutions and IAEA requirements".
"We expect the IAEA to immediately investigate the disturbing information and to report to the IAEA board of governors.
"Iran's decision to build yet another nuclear facility, without notifying the IAEA, represents a direct challenge to the basic compact of the centre of the non-proliferation regime."
"Iran is on notice that when we meet with them in October they are going to have to come clean and they are going have to make a choice - are they going to go down the path of giving up the acquisition of nuclear weapons and abide by international standards in their pursuit of peaceful nuclear energy or continue going down a path that will lead to confrontation," Obama later told a press conference in Pittsburgh.
"The international community has spoken. It is up to Iran to respond.
"I am not going to speculate on the type of action we are going to take. I am going to give October 1st a chance. But we do not rule out any options when it comes to US security interests."
The New York Times reported that the facility was being built inside a mountain near the city of Qom, where Iran's supreme leader and the country's influential clerical leadership are based.
Ali Akbar Saleri, the head of Iran's nuclear agency, told the AFP news agency that the facility was never "secret".
"This installation is not a secret one, which is why we announced its existence to the IAEA," he said.
"When I took over the job in July I committed myself to accelerate co-operation [with the IAEA] and within the existing framework of regulations of our cooperation with the IAEA we announced the existence of this insdtallation to the agency."
Iran's ISNA news agency reported an unnamed source as saying it was similar "to the Natanz enrichment facility".
Al Jazeera's Rob Reynolds, reporting from the G20 summit in Pittsburgh, where world leaders are gathered to discuss the economic crisis, said the New York Times was reporting that Iran sent the letter to the IAEA after Western agents learnt of the facility's construction.
"They sent a very cryptic letter to the IAEA simply saying that a new 'pilot plant' was under construction but not providing any details of where it was or how many centrifuges were included," he said.
Reynolds said that the revelation would "cast a shadow" over talks between Iran and the so-called P5+1 of the United States, Britain, China, Russia, France and Germany, which are scheduled to start on October 1.
"Perhaps it makes it less likely that anything will be achieved there," he said.
"And it will probably make it more likely that if there is no progress in those talks, if those talks fail, that additional sanctions will be applied to Iran."
Iran is currently under UN sanctions for refusing to suspend enrichment and failing to clarify suspicions that its nuclear activity is aimed at developing atom bombs, not generating electricity as it says.
Speaking alongside Obama on Friday, Gordon Brown, the British prime minister, said that he would not let the issue rest and said that he was prepared to push for "further and more stringent sanctions".
"Once Iran develops the centrifuge technology ... then
it is a relatively straightforward step to transfer that technology into a production unit in another location"
China said that negotiations should be the means though which the dispute is resolved and expressed its hopes that the October 1 meeting "will achieve results".
Russia's president urged Tehran to fully co-operate with any IAEA investigation.
Dmitry Medvedev said in a statement that Iran must offer "convincing proof of its intention to develop nuclear energy solely for peaceful aims".
Ban Ki-moon, the UN secretary genera, voiced serious concern that Iran is building a new uranium enrichment facility in a meeting with Iran's president on Friday.
Ban expressed his "grave concern about its (Iran's) activities related to continued uranium enrichment as demonstrated by the construction of a new uranium enrichment facility," Ban's press office said in a statement.
"He emphasized that the burden of proof is on Iran," the statement said.
John Large, a nuclear engineer based in the UK, told Al Jazeera that the new facility showed that the international non-proliferation system, operated by the IAEA, had simply failed.
"Once Iran develops the centrifuge technology, which it seems to have done, then it is a relatively straightforward step to transfer that technology into a production unit in another location," he said.
"That provides all sorts of opportunities for detouring material away from the main production plant ... [and] finishing to a nuclear weapons grade enrichment level at this new plant.
"The logic of Iran's enrichment programme, has been very much doubted, because it just simply doesn't have the civil nuclear reactor capacity to demand an enrichment programme that it has in place."