Iran's nuclear chief Ali Akbar Salehi said the a fuel production line for its sole nuclear power plant will go on stream within three months, media reported on Tuesday.

"The production line of enriched uranium dioxide (UO2) for the provision of fuel to the Bushehr power plant will be fully operational within next three months", said Salehi during a visit to the nuclear site in central city of Isfahan, state news agency IRNA reported.

Under a contract with Russia, Moscow agreed to provide fuel for 10 years, with Tehran committed to returning the spent fuel, guaranteeing that ic can not use it for other purposes, such as military ones.

Salehi did not specify a date after which Iran could use locally produced fuel instead of that provided by Russia.

Iran has informed the International Atomic Energy Agency (IAEA) about the production of the new fuel at the Isfahan nuclear site.

Bushehr nuclear power plant, which produces 1,000 megawatts of electricity, came into service until 2011 after several delays blamed on technical problems. In September,Tehran took control of the Bushehr plant.

Iran could build a new 1,000 megawatt reactor in Bushehr with the help of Russia in Bushehr. Iran has said it wants to produce 20,000 megawatts of electricity from nuclear power, which would necessitate building 20 such reactors.

Salehi said Iran is currently producing in Isfahan 20 percent enriched uranium fuel for a research and medical reactor in Tehran and for the Arak heavy water reactor now under construction.

Western powers and Israel suspect that Iran's declared peaceful programme of uranium enrichment masks a covert weapons drive, a charge vehemently denied by the Iran.

Iran started a new round of negotiations with the so-called P5+1 group of the United States, Britain, France, China and Russia and Germany in mid-October, trying to find a solution to a decade-long standoff on its nuclear programme.