Iran said on Saturday it would press ahead with plans to expand its nuclear program, after diplomats in Vienna said Tehran was installing advanced centrifuges in its key uranium enrichment plant.

The government spokesman also rejected any idea of halting work the United States suspects is aimed at building nuclear bombs in return for trade, technology and other benefits.

Speaking a few days before the Islamic Republic's annual National Nuclear Technology Day on April 8, Gholamhossein Elham said he hoped for "good news" on that day but did not elaborate.

The world's fourth-largest oil producer says it needs to produce nuclear fuel for a planned network of power plants to satisfy soaring electricity demand.

"The trend of advancing nuclear capacity until reaching the production of nuclear fuel and building nuclear power plants to produce 20,000 megawatts of electricity will continue," Elham said.

On Thursday, diplomats told Reuters Iran has begun installing advanced uranium enrichment centrifuges in its Natanz enrichment complex, accelerating activity that could give it the means to make atom bombs in future if it chose to.

Iran has been hit with three sets of United Nations sanctions for hiding the program until 2003, failing to prove to inspectors since then that it is wholly peaceful and refusing to suspend the disputed program.

Enriched uranium can be used as fuel in nuclear power plants or, if refined much further, provide material for weapons.

After a pause of several months, Iran has now assembled more than 300 centrifuges divided into two cascades (interlinked networks) to expand beyond 3,000, the diplomats said.

The Washington Times reported last month the five permanent U.N. Security Council members were preparing a package of incentives for Tehran if it stops its program.

Iranian President Mahmoud Ahmadinejad has rejected the reported package of incentives, Japan's Kyodo news agency quoted him as saying in an interview published on Friday.

Elham said: "This (nuclear technology) is our obvious right and we do not exchange our rights for things like incentives."

Ahmadinejad has also said Iran would only discuss its nuclear program with the U.N. International Atomic Energy Agency (IAEA), rejecting a call by world powers to hold more talks with European Union foreign policy chief Javier Solana.

"We do not accept replacing the IAEA ... in the framework of negotiations," Elham said.

PHOTO CAPTION

Iran's Foreign Minister Manouchehr Mottaki attends a nuclear conference in Tehran March 9, 2008.

Reuters