Iran on Monday suspended the production of 20 percent uranium enrichment in the presence of UN nuclear watchdog inspectors, a senior official announced.

"In line with the implementation of the Geneva joint plan of action, Iran suspended the production of 20 percent enriched uranium in the presence of UN nuclear watchdog inspectors at Natanz and Fordo sites," Mohammad Amiri, director general for safeguards at Iran's Atomic Energy Organisation, told the official IRNA news agency.

"The connections between the twin cascades at Natanz and Fordo for 20 percent production have been disconnected," Amiri said.

"The process of diluting and turning the 196-kilogram (430-pound) stockpile of 20 percent enriched uranium into oxide has also started," he added.

Amiri warned the P5+1 powers -- the United States, Britain, France, Russia and China plus Germany -- that Iran would reverse these steps if the other parties do not keep their end of the bargain.

The UN atomic watchdog has confirmed that Iran's partial nuclear freeze began on Monday as planned, diplomats told AFP.

"It's all fine, all their requirements have been fulfilled," one envoy to the International Atomic Energy Agency said in Vienna, in comments echoed by other diplomats.

The diplomats said that an IAEA report had been sent to member states confirming the start of the freeze.

The IAEA declined to comment.

Under the terms of the November 24 deal, Iran has pledged to limit uranium enrichment to low purities for a period of six months, convert its medium-enriched uranium and not make further advances at its nuclear facilities.

In exchange Western powers will slightly loosen crippling sanctions in a package worth between $6-7, according to the White House, including $4.2 billion in frozen overseas foreign exchange assets in eight instalments starting February 1.

During the six months, Iran and the P5+1 powers -- the US, China, Russia, France, Britain and Germany -- are due to hammer out a long-term "comprehensive accord" aimed at ending once and for all the standoff over Iran's nuclear work.

This six-month period can however be extended by mutual agreement. According to the November 24 interim deal, the parties aim to conclude negotiating and begin implementing it within a year.