TEHRAN, Iran (AP) — Iran will step up its uranium enrichment program by sharply increasing the number of centrifuges used to make nuclear fuel, a senior official said Wednesday, in direct defiance of Western demands.

The statement by Iran's nuclear chief, Fereidoun Abbasi, is likely to escalate tensions. The West suspects Iran's nuclear program could be headed toward weapons production and has imposed punishing sanctions to try to persuade Tehran to stop enrichment.

Iran has denied the charges, saying its program is peaceful and geared toward generating electricity and producing radioisotopes to treat cancer patients.

Uranium enriched to a low level is used to produce nuclear fuel for reactors, but high level enrichment would make it suitable for use in atomic warheads.

Abbasi said Iran is making nuclear advances in the face of the severe economic measures imposed by the U.N. and the West.

"Despite sanctions, we will most likely see a substantial increase in the number of centrifuge machines this year. We will continue enrichment with intensity," Abbasi was quoted by state TV as saying Wednesday. The Iranian calendar year ends on March 20.

Abbasi did not say if Iran's stepped up work would be at the five percent fuel level or the higher 20 percent quality, which has worried the West because it can be purified to weapons grade more quickly. There have been indications that Iran may push its enrichment even higher than the 20 percent acknowledged to U.N. nuclear watchdogs.

His remarks came days after the U.N. agency said Iran is about to double its output of higher enriched uranium at its fortified Fordo underground facility. That could move Iran closer to weapons capability.

A Nov. 8 report by the International Atomic Energy Agency said Iran has installed about 2,800 centrifuges at Fordo and is poised to double the number of operating centrifuges, from the current 700 to nearly 1,400.

Iran says it needs 20 percent enriched uranium to make fuel for a medical research reactor in Tehran that produces isotopes for about 1 million patients annually.

Abbasi also said Iran will soon conduct a test run of its heavy water reactor in Arak in central Iran, despite demands from the U.N. to stop the work. The test will use virtual fuel, not actual radioactive material, he said.

He said construction of the 40-megawatt research reactor is progressing on schedule, but he noted that experts are handling the project with greater care in anticipation of possible sabotage attempts.

"The Arak reactor is progressing without any problem according to the schedule. Only because of security considerations, we are moving with caution, since enemy intends to harm this reactor," he was quoted by state TV as saying. "All the equipment needed to operate this reactor has been purchased."

The West is concerned that the heavy water reactor could produce enough plutonium for a nuclear weapon each year, if the spent fuel is reprocessed. That would be another pathway for bomb-grade material, but Iran is not known to possess a plutonium reprocessing facility

Iran has experienced explosions and malfunctions at its nuclear and industrial sites, partly due to faulty equipment secretly procured on the global market.

Also, Iran says it is the target of a campaign that has included the abduction and assassination of scientists, the sale of faulty equipment and the planting of a destructive computer worm known as Stuxnet, which briefly brought Iran's uranium enrichment activity to a halt in 2010.