Thomas Fingar, deputy US director of national intelligence for analysis, told a Congressional hearing that the Islamic republic "continues to develop" capabilities that could be swiftly adopted for production of nuclear weapons.

"We judge it has the technical and industrial capability to produce nuclear weapons," he told the House of Representatives armed services committee which held the hearing to make a global security assessment.

Lawmakers were particularly keen to find out from senior intelligence officials who testified Wednesday the background behind a new intelligence report in December saying Iran halted its nuclear weapons drive in 2003 and that US charges about Tehran's atomic goals were overblown.

The National Intelligence Estimate (NIE), a consensus view of all 16 US spy agencies, had also cautioned that Iran was keeping its nuclear options open, still bucked international demands to freeze uranium enrichment, and could have the technical ability to make a nuclear weapon sometime between 2010 and 2015.

Asked by one lawmaker whether Iran, by continuing its uranium enrichment activities, was still within striking distance of developing a nuclear weapon, Fingar said, "your logic point is that they have the capacity to resume a weapons program" if they wanted to do so.

He said the US time frame prediction for Iran to develop a nuclear weapon was based on an indigenous capability for enriching uranium, which could be used to make nuclear fuel but also to make fissile material for atomic bombs.

The time frame could be shortened if they procure fissile material elsewhere, he said. "It's the centrifuge program -- fissile material production -- which is the main variable," he said.

Media reports have said Iran is testing advanced centrifuges to enrich uranium, in flagrant defiance of UN resolutions to suspend all enrichment activity until the International Atomic Energy Agency, the UN nuclear watchdog, can verify that such activities are entirely peaceful.

Iran's refusal to suspend enrichment activities, in defiance of two sets of UN sanctions and the threat of a possible third, have fuelled western suspicions that Tehran is seeking to develop the atomic bomb.

Iran insists it has an inalienable right to develop the technology to generate nuclear power to meet the energy needs of a growing population.

related report
Iran testing advanced uranium centrifuges: diplomat
Iran has begun testing advanced second-generation centrifuges, defying UN Security Council demands to end its uranium enrichment activities, Western diplomats said Wednesday.

According to the diplomats, who are posted to the UN's International Atomic Energy Agency (IAEA) in Vienna, Iran has begun real tests of P2 centrifuges with uranium gas with the aim of producing enriched uranium.

"The Iranians are showing their face and it is clear that they want to develop their new centrifuges," said one Western diplomat.

The tests are the exact "opposite" of what the United Nations expects from Iran, said a European diplomat.

In Washington, a senior US intelligence official on Wednesday said that Iran continues to develop capabilities that could be swiftly adapted for production of nuclear weapons.

Western nations, led by the United States, suspect that Iran aims to develop a nuclear weapon, but Tehran says it has a peaceful programme aimed at producing electricity.

Enriched uranium is used to make nuclear fuel, but can also be used to make fissile material for atomic bombs.

UN resolutions have called on Tehran suspend all enrichment activity until the IAEA can verify that such activities are entirely peaceful.

"Any Iranian attempt at a more advanced centrifuge would be an escalation of Iran's ongoing non-compliance with its obligation to suspend all enrichment-related activities," the US ambassador to the IAEA, Gregory Schulte, told AFP last week.

It would constitute a "further violation of Iran's international commitments, further reason why we are concerned about the nature of Iran's nuclear programme and the intentions of its leaders, and further reason for the Security Council to act," he said.

Last year, IAEA inspectors confirmed Iran's claim that it had 3,000 P1 centrifuges up and running at its Natanz nuclear facility, the amount needed, in ideal conditions, to produce enough material in one year to make a single atom bomb.

The P1 centrifuges are currently estimated to be running at only 10 percent capacity.

Experts say that P2 second-generation centrifuges produce 2.5 times more enriched uranium than P1 centrifuges, although Iran has had to design and build its own modified version as foreign-made parts are difficult to come by given the trade embargo in place against the Islamic republic.

The Security Council, led by the United States and European countries, is currently considering new sanctions against Iran, although a vote is not expected until next month after an IAEA report on Iran's cooperation in clearing up past nuclear work.

The proposed new sanctions include an outright travel ban by officials involved in Tehran's nuclear and missile programs and inspections of shipments to and from Iran if there are suspicions of prohibited goods.

The package would form the basis of a third set of economic and trade sanctions against Iran for defying Security Council demands to stop uranium enrichment activities that the West fears could be used to make a nuclear bomb.

While a US intelligence estimate last year said Iran had halted its military nuclear programme, a senior US intelligence official told lawmakers on Wednesday that Iran still possesses the capacity to produce nuclear weapons.

Thomas Fingar, deputy US director of national intelligence for analysis, told a Congressional hearing that the Islamic republic "continues to develop" capabilities that could be swiftly adopted for production of nuclear weapons.

"We judge it has the technical and industrial capability to produce nuclear weapons," he told the House of Representatives armed services committee which held the hearing to make a global security assessment.

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