The United Nations' nuclear watchdog agency plans to warn Iran against the resumption of uranium programme. European nations and the United States are going to have an emergency meeting Tuesday, aiming to persuade Iran to stop nuclear work.
The IAEA confirmed on Monday that work had begun at the plant near the city of Isfahan, after it was suspended in 2004 to allow for negotiations with the EU.
The US and EU had warned any resumption could lead to Iran being referred to the UN Security Council for sanctions, BBC reminds.
The EU and Washington have condemned Iran's latest move.
The British government - the current holder of the rotating EU presidency - said it was deeply concerned, and described Tehran's action as damaging.
However, U.S. state department officials said Washington would help to try to re-open talks between the EU and Iran.
Tehran insists it wants only to use its facilities to produce power, but the US suspects it of running a secret nuclear weapons programme.
Robert Einhorn, a former assistant secretary of State for non-proliferation, accused Iran of escalating tensions through "salami slicing."
"They're testing the international community," he was quoted as saying by USA Today. "If they get a strong reaction, they can stop; if not, they can continue salami slicing."
Iran denies that it intends to make nuclear bombs. But it hid much of its nuclear program for two decades, which raises questions about its intentions.
Iran acted after rejecting a U.S.-backed European offer to provide fuel for nuclear plants and other cooperation in return for giving up its fuel program.
Iran's ambassador to the U.N., Mohammed Javad Zarif, said that proposal was "unacceptable," USA Today reports.
The 34-page proposal, a copy of which was provided by Zarif, demands that Iran let U.N. inspectors "visit any site or interview any person they deem relevant to their monitoring of nuclear activity in Iran." That is similar to the access inspectors had in Iraq. In return, the proposal says Iran "should have sustained access to nuclear fuel" for power plants and greater cooperation in fields ranging from air safety to seismology.
The proposal also says Iran must respect human rights and take new measures to prevent terrorism. The United States accuses Iran of violating human rights and supporting terrorist groups.