For the first time, Iran has loaded nuclear fuel rods made on Iranian soil into a research reactor at a ceremony attended by President Mahmoud Ahmadinejad.
The enriched uranium fuel was placed into the Tehran Research Reactor on Wednesday.
Broadcast on state TV, the footage shows the Iranian leader being shown around the facility in a white coat, flanked by what appear to be senior scientists of the regime.
A rod is then lowered into the cooling pool with Ahmadinejad looking on, a move that could be interpreted as a message of defiance to the west and the sanctions imposed following last year's International Atomic Energy Agency (IAEA) report that concluded that Iran was fixated on producing a nuclear bomb.
"We began enriching uranium to 20% in order to make fuel rods because Western countries are not ready to help us," said deputy head of Iran's Supreme National Security Council Ali Baqeri, according to a student news agency and Reuters.
"For the first time, fuel rods produced by Iranian scientists will be installed in the presence of the Islamic Republic's president in Tehran's research reactor."
Following the announcement, French deputy foreign ministry spokesman Romain Nadal, said: "These statements are an extra concern for the international community. The Iranian military nuclear programme constitutes one of the most serious threats to peace not only in the world but in the region. We are convinced that Iran continues to develop this programme."
The British government also voiced its concerns, promising to "increase peaceful and legitimate pressure" on the Iranian Republic. A Foreign Office spokesman said the move did not give "confidence that Iran is ready to engage meaningfully on the international community's well-founded concerns about its nuclear programme."
He added: "Until it does so, we'll only increase peaceful and legitimate pressure on Iran to return to negotiations."
Iran says it has made the 20% enriched uranium because it wanted to make isotopes to treat cancer.
According to the regime, the research reactor is to be used for medical purposes and agricultural products. It previously ran on Argentinian fuel rods but it did not reach an agreement to extend the trade deal.
Despite international pressure, Iran has refused to suspend its nuclear research, heightening tensions in the region.
On Tuesday the USS Abraham Lincoln sailed through the Strait of Hormuz in what it said was a routine mission, shadowed at all times by Iranian patrol boats.
The United States and the EU have both imposed sanctions on the Iranian government. The EU has banned oil imports from the country and lobbied other nations and trading blocs to follow suit.
Iran said on Wednesday that it was open to holding talks without preconditions with the EU, but did not give further details.
Meanwhile Sky News said that its sources indicated the Iranian government had formed an "operational arrangement" with the Al Qaida terrorist network.
Two Iranian men were charged in connection with terrorist attacks in Bangkok on Tuesday.
One of the suspects blew his own legs off when a grenade he threw at police bounced off a tree.
Speaking on Wednesday the prime minister of Israel, Benjamin Netanyahu, blamed Iran for the blasts as well as another in India that targeted an Israeli diplomatic car.
"At this time, Iran's terrorist activities have been exposed to everyone," Netanyahu said.