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Iran is believed to be further increasing its uranium enrichment capacity at its Fordow plant buried deep underground, Western diplomats say, in another sign of Tehran defying international demands to curb its disputed nuclear programme.

Fordow - which Tehran only disclosed the existence of in 2009 after learning that Western spy services had detected it - is of particular concern for the United States and its allies as Iran uses it for its higher-grade enrichment.

Iran says its nuclear programme is a peaceful project to generate electricity but its refusal to limit the work and lack of transparency with U.N. inspectors have been met with increasingly tough Western sanctions targeting its oil exports.

European Union governments imposed sanctions on Tuesday against major Iranian state companies in the oil and gas industry, and strengthened restrictions on the central bank, cranking up financial pressure on Tehran.