The U.N. nuclear watchdog has found traces of weapons-grade enriched uranium at a second site in Iran, diplomats said on Thursday, and President Bush warned Tehran it faces global condemnation.

One diplomat told Reuters the discovery could support Tehran's explanation that the discovery of highly enriched uranium at a previous site in Iran was due to contamination from imported components.

But several other diplomats said it could support the U.S. theory that Iran has been secretly purifying uranium for use in a nuclear explosive device -- a charge Tehran denies.

A month before a U.N. deadline for Tehran to prove it has no secret atomic weapons program, Bush said Iran faced universal condemnation if it kept pursuing a nuclear weapons program -- charges Tehran has repeatedly denied.

The White House said earlier Iran had "one last chance" to comply with nuclear safeguards and threatened to take the dispute to the U.N. Security Council if Tehran refused.

Bush told reporters Iran's nuclear ambitions would be on the agenda for his talks on Friday and Saturday with Russian President Vladimir Putin.

Bush has pressed Putin to stop Russia helping Iran build its first nuclear power station in the southern port of Bushehr, a deal worth some $800 million.

Speaking to Reuters on condition of anonymity, the diplomats said the new traces of enriched uranium were found in environmental samples taken during inspections at the Kalaye Electric Company on the southern outskirts of Tehran. Earlier this year, inspectors from the International Atomic Energy Agency (IAEA) found traces of enriched uranium at a plant at Natanz, some 150 miles south of the Iranian capital.

SKEPTICISM

The IAEA finding at Natanz was a surprise, since Iran had insisted its enrichment centrifuges were never tested live -- that is, with nuclear material. Also, Iran has always said it only wants to produce low-enriched uranium, unusable in bombs.

Tehran, which says its nuclear program is peaceful, blames the earlier find at Natanz on machinery which it says was contaminated with enriched uranium when it was purchased abroad on the black market in the 1980s.

This explanation has met with skepticism inside and outside the IAEA and Washington dismissed Iran's comments.

"These are part of a long-standing pattern of evasion and deception to disguise the true nature and purpose of Iran's nuclear activities," White House spokesman Scott McClellan told reporters.

The Security Council has the power to impose diplomatic and economic sanctions.

However, one Western diplomat said failure to get a positive result from samples taken at Kalaye would have been surprising, as this is where Iran said it stored the centrifuge components which it says were contaminated.

"Not getting a positive result would have been odd," the diplomat said. "This was the facility where components used in the centrifuges were said to be stored and manufactured."

Another Western diplomat disagreed, saying this finding would not vindicate Iran, but could support the theory Iran has been enriching uranium secretly at Natanz and Kalaye.

For months, Iran had refused to permit the IAEA to take samples at Kalaye, but finally relented in August. But when inspectors arrived, the IAEA said the Kalaye workshop they wanted to visit had undergone "considerable modifications."

Western diplomats have said they believed Iran was trying to sanitize the workshop in order to conceal something.

Diplomats also said that the new finding could mean Iran has been covertly testing its enrichment machinery at Kalaye.

An IAEA spokeswoman neither confirmed nor denied the diplomats' statements, saying only that the IAEA was focusing on Iran's October 31 deadline and the departure of inspectors to Tehran on Sunday for a month of intensive inspections and talks.

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