The UN nuclear watchdog, the IAEA, said the research would involve small-scale enrichment of uranium, useable in power plants or weapons.
The United States and European Union powers warned Iran it risked referral to the UN Security Council for possible sanctions. Russia, Iran's nuclear energy partner, also criticised the move.
Washington said that if Tehran began uranium enrichment it would be a "serious escalation" of its dispute with the West.
"Iran's nuclear research centres have restarted their activities," Mohammad Saeedi, deputy head of Iran's Atomic Energy Organisation, told state television. He denied Iran intended to produce nuclear fuel.
"There is a difference between research and producing nuclear fuel ... The production of nuclear fuel is still under suspension," he told a news conference.
British Foreign Secretary Jack Straw said he was consulting EU colleagues on how hard to push for a Security Council referral. He said if Tehran showed an intention to develop a nuclear facility, it risked bringing instability to the Middle East region.
But Straw stressed the dispute with Iran had to be resolved by diplomatic means. "Military action is not on our agenda, I don't believe in practice it is on anyone else's agenda," he told parliament.
RUSSIAN CRITICISM Russia, which is helping to build a nuclear power station at the southern Iranian port of Bushehr, also criticised the move.
"The latest information that Iran has announced its intention in the near future to restart work connected with the enrichment of uranium provokes concern," Russian news agencies quoted Foreign Minister Sergei Lavrov as saying.
He noted the move was "despite a moratorium which was agreed between Iran and European countries and despite the fact that this agreement was registered with the International Atomic Energy Agency (IAEA)".
"The IAEA's board sees such a moratorium as essential for the resolution of remaining questions on Iran's nuclear programme," the foreign ministry said in a statement. Mohamed ElBaradei, head of the IAEA, told its 35-nation governing board that Iran intended to carry out limited uranium enrichment at its Natanz facility, where it broke UN seals as IAEA inspectors watched.
"Iran plans to install a small-scale gas ultracentrifuge cascade in its pilot fuel enrichment plant at Natanz," a Western diplomat said, reading from ElBaradei's report.
The IAEA said the research would involve feeding uranium hexafluoride gas into the centrifuges. These machines can purify uranium gas to a low level for nuclear power plant fuel or to a higher level for weapons.
Straw said he would meet his French and German counterparts and EU Foreign Policy Chief Javier Solana in Berlin on Thursday.
German Foreign Minister Frank-Walter Steinmeier said the EU trio, which has negotiated with Iran on the nuclear issue, would decide whether there was now any basis for further talks. French Foreign Minister Philippe Douste-Blazy said: "We call on Iran to reverse this decision without delay and unconditionally."
European diplomats have said they would seek an emergency IAEA meeting to consider referring Tehran to the UN Security Council. The United States said this now looked inevitable. "If the regime in Iran continues on the current course and fails to abide by its international obligations, there is no other choice, but to refer the matter to the Security Council," White House Spokesman Scott McClellan said.
Tehran denies wanting nuclear technology for anything but a civilian energy programme aimed at satisfying the Islamic Republic's booming demand for electricity.
Western powers had called on Iran to refrain from any work that could help it in developing atomic weapons. The EU said Iran's latest action was "eroding international confidence in the peaceful nature of its nuclear programme".
Several diplomats said the IAEA board had received a full report on Iran's breaking of IAEA seals at three nuclear facilities that had been mothballed under a November 2004 deal with Britain, France and Germany.
Although the scale of the centrifuge research would be small, diplomats say it could enable Iran to master the art of enriching uranium so that it could make bombs in future. Saeedi said the IAEA would monitor work at the research facilities, including Natanz, an underground plant in central Iran that Tehran concealed from the UN inspectors until an Iranian exile group revealed its existence in August 2002.