Mahmoud Ahmadinejad maintained, however, that Iran was also still willing to follow a U.N. plan to export its uranium abroad for further enrichment. Refining uranium produces nuclear fuel for a power plant but if carried out far enough can create material for a weapon.
The mixed messages from Tehran have infuriated the U.S. and its European allies, who claim Iran is only stalling for time as it attempts to build a nuclear weapon. U.S. Defense Secretary Robert Gates called for the international community to pressure Iran into abandoning its nuclear program.
German Defense Minister Karl-Theodor zu Guttenberg said, "Today's statement shows that farce is being played out just like we have seen in the past, that the outstretched hand of the international community has not only not been taken but pushed back."
The U.N.'s nuclear watchdog has been working on a compromise to defuse international tensions over Iran's nuclear program. In October, the U.N. proposed that Tehran export its low-enriched uranium to Russia and France, who would return it a year later as enriched fuel rods that could be used to power Iran's research reactor but couldn't be further refined to make weapons-grade material.
By announcing that Iran would enrich the fuel on its own, Ahmadinejad appeared to reject the U.N. International Atomic Energy Agency's deal - even though he had seemed to endorse it just days earlier.
Iran wants to enrich its stockpile of uranium to 20 percent, up from 3.5 percent, to power a research reactor to produce medical isotopes. But the international community has demanded a halt to all enrichment activity because the same process is used to produce weapons-grade material.
While material for a nuclear weapon is enriched to a level of 90 percent, just getting its stockpile to the 20 percent mark is a major step for the country's nuclear program.
Achieving that level "would be going most of the rest of the way to weapon-grade uranium," said David Albright, whose Washington-based Institute for Science and International Security tracks suspected proliferators.
Speaking on state television, Ahmadinejad said "God willing, 20 percent enrichment will start." He then turned to the head of Iran's atomic energy agency, Ali Akbar Salehi, and said: "Begin production of 20 percent (enriched uranium)."
At the same time, Iran's president said he had not "closed the door" to the IAEA's exchange option. "We are still ready for a swap deal."
Salehi later appeared on state TV and said that a letter would be sent to the IAEA saying that Iran will start enriching its uranium to 20 percent on Tuesday.
Ahmadinejad also said Iran has acquired laser technology for enrichment of uranium, but added, "For now, we do not intend to use it."
The United States and its Western allies have been pushing for a fourth round of U.N. sanctions to be slapped on Iran over its disputed nuclear program. But with Russia, and especially China, skeptical of any new U.N. penalties, they have to tread carefully to maintain unity on how to deal with the Islamic Republic.
Speaking to reporters during a weeklong European tour, Gates said that "if the international community will stand together and bring pressure" on Iran, "I believe there is still time for sanctions to work."
Gates declined to be specific about the type of sanctions he had in mind, but explained that the focus should be on putting pressure on the government in Tehran and not hurting the people.
"The rest of the world has really begun to see Iran the way we see it," U.S. Secretary of State Hillary Rodham Clinton said in an interview broadcast Sunday on CNN's State of the Union.