Iran on Monday halted production of 20 percent enriched uranium, marking the entry into force of an interim deal with world powers on its disputed nuclear programme.
The suspension started the clock on negotiating a trickier long-term accord aimed at ending the Iran nuclear standoff and averting war once and for all.
In exchange for Iran's partial nuclear freeze, Western powers will slightly loosen crippling sanctions in a package worth between $6-7 billion, including $4.2 billion in frozen overseas foreign exchange assets in eight instalments starting February 1.
The European Union led the way on Monday, announcing in a statement it had suspended a range of sanctions against Iran for a period of six months.
Washington was expected later Monday to make a similar announcement.
Mohammad Amiri, a top official of Iran’s Atomic Energy Organisation, told the IRNA news agency that Tehran had kept to its part of the deal reached in Geneva in November with the P5+1 powers -- the US, China, Russia, France, Britain and Germany.
"In line with the implementation of the Geneva joint plan of action, Iran suspended the production of 20 percent enriched uranium in the presence of UN nuclear watchdog inspectors at Natanz and Fordo sites," Amiri said.
The International Atomic Energy Agency confirmed Amiri's comments, saying in a report passed to member states that Iran "has ceased enriching uranium above five percent" fissile purities at the Natanz and Fordo facilities.
The report, seen by AFP, said that Iran was also converting its stockpile of medium-enriched uranium, a particular concern to the international community since it can be relatively easily be further purified to weapons-grade.
The UN atomic watchdog added that Iran "is not conducting any further advances to its activities" at Natanz, Fordo or the heavy-water reactor under construction at Arak, which could in theory provide Iran with weapons-grade plutonium.
"It's all fine, all their requirements have been fulfilled," one diplomat told AFP.
Soon afterwards the EU statement was issued in Brussels.
"As part of the implementation of the Joint Plan of Action agreed by Iran and the (P5+1), which enters into force today, the Council today suspended certain EU restrictive measures against Iran for a period of six months," it said.
Under the deal, Iran in the next months will not install or switch on new nuclear machines and will grant the IAEA more access, including daily visits to the Fordo and Natanz enrichment facilities.
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But the core sanctions will still bite. Over the next half-year alone, Iran will miss out on $30 billion in oil revenues, the White House says.
Most of Tehran's $100 billion in foreign exchange holdings remains off-limits.
Mark Fitzpatrick, a former US State Department official now at the International Institute for Strategic Studies, said the P5+1 powers will want Iran to slash the number of centrifuges to 3,000-4,000 from the current 19,000.
In addition Iran will have to mothball Fordo; change the Arak reactor under construction so it cannot produce weapons-grade plutonium; and cut the stockpile of low-enriched uranium to less than a bomb's worth, Fitzpatrick told AFP.
Coupled with tighter inspections, this would not remove entirely Iran's capability to make nuclear weapons -- it denies having this aim -- but it would make it considerably more difficult. According to US President Barack Obama it would be "impossible".
Agreeing the interim deal was hard enough, and neither side is under any illusions about the difficulty of securing a long-term agreement.
Even if a deal is reached, its terms may be too tough for hardliners in Iran and too lax for their US counterparts and Iran's arch-enemy Israel, the Middle East's sole if undeclared nuclear power.
Conservative newspapers on Monday opposed implementing the deal.
Under the headline "Nuclear holocaust", Vatan-e Emrooz said that the Geneva accord will see most of Iran's nuclear activities come to a halt.
A push by US lawmakers -- including some from Obama's own party -- to impose new sanctions could also scupper the process since this would contravene the interim deal.
This would "send the message to Tehran that the United States is unable to hold up its end of the bargain," Kelsey Davenport from the Arms Control Association told AFP, "likely derailing the initial deal and jeopardising negotiations on the comprehensive agreement".