Iran's atomic chief on Sunday undercut an idea put forward by some lawmakers to make nuclear-powered submarines and ships, even though he claimed Tehran had the technology to do so later if it wished.

The comments by Fereydoon Abbasi Davani, head of Iran's Atomic Energy Organisation, as reported by the news agency ISNA, poured cold water on a recent draft bill by some Iranian parliamentarians that seeks to give Tehran a reason to produce high-enriched uranium.

"We don't have a plan right now in this area," Abbasi Davani was quoted as saying.

He asserted, though, that "we do have the ability to design such reactors for ships" if a decision was made to go in that direction.

Enrichment is at the heart of the showdown between Iran and the West over Tehran's nuclear programme.

Iran, which currently enriches uranium up to 20 percent, ostensibly to make medical isotopes in its Tehran research reactor, insists its programme is exclusively peaceful.

But the United States and its allies fear that 20-percent enrichment puts Iran just a few technical steps short of being able to produce military-grade uranium of 90-percent or more, which is used in atomic bombs.

Negotiations on the issue reopened this year between Iran and the P5+1 group of nations (the United States, Britain, France, Russia, China, plus Germany) have hit an impasse and been downgraded to a lower level.

Israel and the United States have underlined that military force remains an option should diplomacy and a punishing set of international sanctions fail to make Tehran yield.

Iranian lawmakers signalling their defiance in the face of the pressure floated the idea of their country making nuclear-powered submarines and freighters in what observers took to be an attempt to raise the stakes in the talks.

This month, several lawmakers entered a bill calling on the government to prepare the way for Iran to make nuclear-powered commercial ships -- a technological feat seen as both uneconomical and beyond the ability of all but the world's most-advanced nuclear states.

"If it's necessary and the government so decides, we have no problem to advance towards such systems and technologies," Abbasi Davani was quoted as saying.

He said that, in the case of ships, "it's not necessary to have fuel (enriched) beyond 20 percent -- there are reactors that work with 3.5 percent or five percent in ships.... But if it's for submarines... higher enriched uranium is needed."

But, he repeated: "Right now, we have no plan to do so. Currently, fuel production to 20 percent is carried out for the Tehran reactor and for another similar reactor we are planning to build."

He also said that "ships with nuclear fuel have environmental problems."

If a decision were ever made to proceed with ship-board nuclear reactors, Abbasi Davani added, "we will hold the necessary coordination with the IAEA," the UN's nuclear watchdog.