Video report by ITV News Correspondent Juliet Bremner
Tehran has said it will break the uranium stockpile limit set by the Iran nuclear deal in the next 10 days.
The country's atomic agency also warned that Iran could enrich uranium up to 20% – just a step away from weapons-grade levels.
It add that it was quadrupling its production of the material, which is used to make reactor fuel and potentially nuclear weapons, but was only do so "based on the country's needs".
The announcement, timed for a meeting of EU foreign ministers in Brussels, puts more pressure on Europe to come up with new terms for Iran’s failing nuclear deal.
What is the Iran nuclear deal?
In 2015, Iran agreed a long-term deal on its nuclear programme with the US, UK, France, China, Russia and Germany.
Under the accord, Iran agreed to limit its sensitive nuclear activities and allow in international inspectors in return for the lifting of crippling economic sanctions.
It came after years of tension over Iran's alleged efforts to develop a nuclear weapon.
Iran insisted that its nuclear programme was entirely peaceful, but the international community did not believe that.
So why is Iran enriching more uranium?
In May 2018, US President Donald Trump pulled America out of the deal, saying Iran was violating the spirit of it, arguing Tehran was not an ally and that it was working against US interests in the Middle East.
This, and the reimposing of sanctions against Iran led to a downturn in the country's economy, pushing the value of its currency to record lows, quadrupling its annual inflation rate, driving away foreign investors, and triggering protests.
The deal has steadily unravelled since the Trump administration pulled America out.
Europe so far has been unable to offer Iran a way around the US sanctions.
Since other countries are not sticking to the deal, Iran does not see why it should.
Why has Iran increased its enrichment rate?
In early May, Mr Trump further stepped up pressure on Iran by ending exemptions from US secondary sanctions for countries still buying Iranian oil, increasing the economic impact on Iran.
The move was intended to deny the Iranian government its principal source of revenue.
Angered by the US's actions, Iranian President Hassan Rouhani subsequently announced that his country was scaling back its commitments under the nuclear deal.
This included no longer complying with caps on its stockpiles of low-enriched uranium and heavy water (which is used as a moderator in nuclear reactors) - set at 300kg and 130 tonnes respectively - and halting sales of surplus supplies overseas.
Mr Rouhani also gave the European powers 60 days to protect Iranian oil sales.
If they failed, he said, Iran would suspend its restrictions on uranium enrichment and halt the redesign of its heavy-water reactor at Arak, whose spent fuel would contain plutonium suitable for a bomb.
What else has Iran said?
Iran's atomic agency spokesperson, Behrouz Kamalvandi has accused Europeans of “killing time” as the clock runs down, adding that there will soon "be no deal anymore".
Mr Kamalvandi said that given Iran’s recent decision to quadruple its production of low-enriched uranium, it would pass the 300kg limit on July 27.
The nuclear deal had limited Iran to enriching uranium only to 3.67%, which is enough for power plants and peaceful purposes.
Mr Kamalvandi continued that Iran needs 5% enrichment for its nuclear power plant in the southern Iranian port of Bushehr and it also needs 20% enrichment for a Tehran research reactor.
He added that Tehran will only increase uranium enrichment levels “based on the country’s needs” and that it would continue to allow the UN to inspect its nuclear facilities for the time being.
Mr Kamalvandi spoke to Iranian journalists in a news conference at the country’s Arak heavy water nuclear reactor.
Such reactors produce plutonium that can be used in nuclear weapons.
Iran, under the nuclear deal, had reconfigured the facility to address Western concerns on that issue.
However, Mr Kamalvandi said the country could rebuild the facility to make it produce plutonium.
What is uranium enrichment?
Enriching a supply of uranium means boosting its concentration of the type of uranium that can power a nuclear reaction.
Depending on how much uranium is enriched, it can be used to fuel nuclear reactors, or can be turned into chemical weapons.
Iran maintains its nuclear programme is for peaceful purposes.
What has the UK said?
Downing Street said "all options" would be examined if Iran breached the terms of the Joint Comprehensive Plan of Action (JCPOA) deal.
"We have been clear about our concern at Iranian plans to reduce compliance with the JCPOA," a spokesperson for the Prime Minister said.
"Should Iran cease meeting its nuclear commitments, we would then look at all options available to us."
Foreign Secretary Jeremy Hunt also warned there is a "great risk" of a drift to war due to Iran's activities in the region following the attacks last week in the Gulf on two oil tankers.
What have other countries said?
In Brussels on Monday, European Union foreign ministers said they were still looking for more information on who might be behind the incident involving the tankers.
Germany and others insisted they need a clearer picture before wading into a diplomatic conflict which could have serious implications in the Middle East.
German foreign minister Heiko Maas said that US and British intelligence needs to be compared with other information from allies.
“We have to be very careful,” he said.
EU foreign policy chief Federica Mogherini said it was not a time to jump to action without proper information.
“The maximum restraint and wisdom should be applied,” she said ahead of the monthly foreign ministers meeting in Luxembourg.
What about the oil tanker attacks last week, have they further soured relations?
Meanwhile, a series of mysterious attacks have targeted oil tankers and Iranian-backed Houthi rebels in Yemen have launched a series of drone and missile attacks on Saudi Arabia.
Iran's announcement on Monday comes in the wake of apparent attacks on oil tankers last week in the Middle East, assaults that Washington has blamed on Iran.
While Iran has denied being involved, it has used mines in the past against commercial traffic around the crucial Strait of Hormuz, through which a fifth of the world’s crude oil passes.
The US alleges Iran used limpet mines to target two tankers last Thursday, pointing to black-and-white footage it captured that American officials describe as an Iranian Revolutionary Guard vessel removing an unexploded mine from the Japanese-operated tanker Kokuka Courageous, one of the two ships that were targeted.
The Japanese tanker’s owner said its crew described “flying objects” as having targeted the vessel.