Diplomats say Iran has started changing some nuclear material that could be used for weapons into another form but in amounts too small to reduce concerns about its atomic program.
They say it is changing small amounts of 20-percent uranium into reactor fuel. That 20 percent material is only a technical step away from weapons-grade uranium.
Tehran last year converted close to 100 kilograms (220 pounds) of 20-percent uranium into reactor fuel before stopping.
The diplomats said Monday conversion had restarted but remains vastly outpaced by 20-percent production.
Experts estimate that Iran could have enough 20-percent uranium for one bomb by summer if further enriched.
The diplomats are close to the International Atomic Energy Agency. They demanded anonymity because they are not authorized to discuss the issue.