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IAEA: Iran has 1,300 centrifuges up and running
Inspectors have been into underground cascade halls, seen equipment

 Jacqueline Shire contributed to this report.

International Atomic Energy Agency inspectors have confirmed through firsthand observation that Iran has over 1,300 centrifuges in operation, a diplomat close to the organization told ABC News.

The finding, noted in an April 18 letter from the IAEA to Iran, confirms earlier ABC News reporting that Iran had drastically increased its capacity to enrich uranium, which can be used for reactor fuel at low levels of enrichment or for nuclear weapons at much higher levels.

In the letter, the IAEA wrote that Iran has claimed to have "eight cascades" operating at the Natanz fuel enrichment plant. Each cascade consists of 164 centrifuges, bringing to just over 1,300 the number of centrifuges Iran is operating.  IAEA inspectors have been into the underground cascade halls and seen the centrifuges, the diplomat told ABC News.

Previously, Iran had acknowledged only 320 centrifuges at the site.

Just nine days ago, Iran announced it had reached the "industrial scale" to produce nuclear fuel at the site.

In its letter, the IAEA, an intergovernmental body which monitors nuclear efforts around the world, also expressed concern that Iran may be moving ahead with work on its heavy water reactor without submitting to inspections and other verification measures, as it had agreed to. "As Your Excellency's authorities are aware...[the agreement]cannot be modified unilaterally."

ABC News consultant Jacqueline Shire, a senior analyst at the Institute for Science and International Security, noted that the IAEA had earlier sought to install cameras at the Natanz facility in order to monitor activity there. Surprise inspections, she said, involved logistical challenges and may require the group to maintain personnel in Iran on a close to ongoing basis.