TEHERAN, Iran - Iranian and Western sources said on Monday Iran had switched on a uranium enrichment plant deep inside a mountain, a momentous step that aggravates Teheran's nuclear dispute with the West.

The moves come at a time when new US sanctions imposed over Iran's nuclear program are causing real economic pain. Teheran has responded with threats to international shipping that have spooked oil markets. And a parliamentary election in two months is widening Iran's internal political divisions.

"The enrichment in Fordow has started," said an Iranian official who asked not to be identified. Two diplomats at the Vienna headquarters of the International Atomic Energy Agency, which has inspected the site, confirmed it.