VIENNA - The United Nations' nuclear watchdog has set up an Iran Task Force to handle inspections and other issues related to the Islamic state's disputed atomic activities, an internal IAEA document showed on Wednesday.

The brief announcement by the International Atomic Energy Agency, addressed to agency staff, appeared to be an attempt to focus and streamline the IAEA's handling of the sensitive Iran file by concentrating experts and other resources in one unit.

The Vienna-based UN agency, which regularly inspects Iran's nuclear sites, has voiced growing concern over the last year of possible military dimensions to the country's nuclear program. Tehran says its nuclear work is entirely peaceful.

A new report to be circulated to IAEA member states later this week is expected to say that Iran has installed 350 new centrifuges in its underground Fordow facility since May, AFP quoted Vienna-based diplomats as saying on Wednesday.

Iran is enriching uranium to a fissile concentration of 20 percent -- easily upgraded to the 90 percent needed for bombs -- at Fordow, buried deep inside a mountain near the holy Shi’ite city of Qom to protect it from foreign attack.

The Vienna diplomats also expect the report to chastise Iran over sanitizing its military base at Parchin.

The ongoing sanitization efforts, meant to eliminate evidence of possible nuclear work at the site, may make inspections "pointless," according to the diplomats.

Iran indicated on Monday it might allow diplomats visiting Tehran for this week's Non-Aligned Movement (NAM) summit to inspect the Parchin military base, which UN nuclear experts say may have been used for nuclear-related explosives tests.

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When asked about the possibility, Iranian Deputy Foreign Minister Mohammad Mehdi Akhoundzadeh said: "Such a visit is not customary in such meetings.... However at the discretion of authorities, Iran would be ready for such a visit," the Iranian government-linked news agency Young Journalists Club reported.

Any visit to Parchin by NAM representatives would do little to calm Western concerns or those of the IAEA whose talks with the Iranians ended on Friday without agreement.

The UN body suspects that Iran has conducted explosives tests in a steel chamber at Parchin relevant for the development of nuclear weapons, possibly a decade ago.

Last week diplomatic sources said Iran had covered the building believed to house the explosives chamber with a tent-like structure, fueling suspicions about a clean-up there.

Iran says Parchin, a vast, sprawling complex southeast of Tehran, is a conventional military facility and has dismissed allegations about it as "ridiculous".

'West urges Arabs not to target Israel at IAEA'

Western envoys are urging Arab states not to berate Israel over its assumed nuclear arsenal at the UN atomic agency's annual conference, fearing this could imperil wider efforts for a nuclear weapons-free Middle East, diplomats say.

A senior diplomat said Arab countries would criticize Israel but were divided over whether to submit a resolution on the issue to next month's annual General Conference of the United Nations' 154-nation International Atomic Energy Agency (IAEA).

Diplomats said Arab states had not yet decided whether to propose a non-binding but symbolically important draft text criticizing "Israeli Nuclear Capabilities" at this year's week-long meeting that starts on September 17.

They expressed concern that an Arab move against Israel would discourage the Jewish state from attending the talks due to be held later this year on a nuclear arms-free Middle East.

An Egyptian plan for an international meeting to lay the groundwork for the possible creation of a Middle East free of weapons of mass destruction was agreed at a review conference on the nuclear Non-Proliferation Treaty (NPT) in 2010.

Reuters contributed to this report.

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