A state-run newspaper says Iran has officially confirmed it has stepped up uranium enrichment by injecting gas into a second network of centrifuges.

The Iran Daily quotes the deputy of Iran's Atomic Energy Organization, Mohammad Ghannad, as saying the new cascade has started work in the last two weeks.

He also said inspectors with the U.N. nuclear watchdog visited the cascade at Natanz last week.

Iran's semi-official student news agency, ISNA, quoted unnamed sources in a report on Friday that said Iran has doubled its enrichment capacity.

President Bush responded to the ISNA report by saying the idea of Iran having a nuclear weapon is unacceptable. He called for increased international efforts to persuade Iran there is "only isolation" if it continues its nuclear program.

Britain, France and Germany have proposed a draft U.N. Security Council resolution that would impose sanctions on Iran for its nuclear program and refusal to suspend enrichment activities.

In other news, the United States said on Friday that it will participate in international naval exercises in the Persian Gulf, near Iran, to practice stopping shipments of nuclear materials.

A senior State Department official, Robert Joseph, says the exercises will start on Monday and will also involve vessels from France, Italy, Australia, Britain and Bahrain.

Western nations accuse Iran of trying to develop nuclear weapons - a charge that Tehran denies.

Some information for this report was provided by AFP, AP and Reuters.