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Ahmadinejad made the announcement during a live broadcast with Iranian energy head Ali Akbar Salehi, Iran's state-run Press TV reported.

"Please start 20 percent enrichment, though we are still in talks about a fuel exchange", he told Salehi. "We are ready for exchange. But if (Western countries) don't like an exchange, we go our own way."

Ahmadinejad made the announcement a day after U.S. Defense Secretary Robert Gates expressed skepticism that Iran would agree to exchange the bulk of its uranium supply for fuel for its medical reactor in Tehran.

The plans aims to keep Iran from processing its own uranium and provide international oversight. Western nations fear Iran is trying to develop atomic weapons.

Iran has insisted its nuclear program is peaceful and the 20 percent enriched uranium is to be used to aid thousands of Iranian patients in need of post-surgery drug treatment with nuclear medicine.

To enrich uranium, ore is purified into solid "yellowcake", which is processed into uranium hexaflouride gas that is fed through centrifuges that separate isotopes and increase enrichment.

Uranium used for civil energy production needs to be enriched to about 3 percent, while weapons grade uranium must be enriched to 90 percent.

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