Iran halted production of 20 percent enriched uranium on Monday, marking the entry into force of an landmark deal with world powers on its disputed nuclear programme.

After nearly a decade of negotiations between Western powers and Iran over its nuclear drive, which the West suspected was aimed at developing weapons despite Tehran's denials, the two sides reached the interim agreement in November.

And the powers kept to their part of the deal, with both the European Union and United States announcing they were easing crippling sanctions on Iran.

The move came as the United Nations invited Iran to a peace conference on the war in Tehran's ally Syria, despite objections from Arab and Western nations.

Implementation of the nuclear deal also started the clock on negotiating a trickier long-term accord to end the nuclear standoff and avert a possible war.

Under the deal Western powers are to loosen the sanctions in a package worth $6-7 billion, including $4.2 billion in frozen overseas foreign exchange assets, in eight instalments starting February 1.

Mohammad Amiri of Iran's Atomic Energy Organisation said Tehran had honoured its side of the deal reached with the P5+1 powers -- UN Security Council permanent members Britain, China, France, Russia and the United States plus 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 told state media.

The International Atomic Energy Agency confirmed Iran "has ceased enriching uranium above five percent" fissile purities at the Natanz and Fordo enrichment facilities, the IAEA said in a report passed to member states and seen by AFP.

It said Iran was also converting its stockpile of medium-enriched uranium, a particular concern to the international community since it could easily be purified to weapons-grade.

The IAEA said Iran "is not conducting any further advances to its activities" at Natanz, Fordo or the heavy-water reactor under construction at Arak, which could provide weapons-grade plutonium.

"It's all fine, all their requirements have been fulfilled," a diplomat told AFP.

British Foreign Secretary William Hague said Monday's implementation was a key milestone but stressed "it is important that other sanctions are maintained and the pressure is maintained for a comprehensive and final settlement".

EU, US announce sanctions relief

EU foreign policy chief Catherine Ashton, who represents the P5+1, said she would meet representatives of the major powers Tuesday to press for further negotiations with Iran on a comprehensive solution.

"We should build on the momentum that we've got and start moving towards significant dialogue and negotiation in the next weeks," she said.

Ashton's comments came after the EU and the US announced steps to ease the sanctions.

"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," the EU said.

US Secretary of State John Kerry also approved a waiver to ease the sanctions, spokeswoman Jen Psaki said, as the Washington hailed Iran's actions as "an important step forward".

Under the deal, Iran will not install or switch on new nuclear machines and will grant the IAEA daily visits to the Fordo and Natanz enrichment facilities.

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.

Comprehensive accord

Mark Fitzpatrick, a former US State Department official now at the International Institute for Strategic Studies, said world powers will want Iran to slash the number of centrifuges to 3,000-4,000 from the current 19,000.

Iran must also mothball Fordo, change the Arak reactor so it cannot produce weapons-grade plutonium, and cut the stockpile of low-enriched uranium to less than a bomb's worth.

Coupled with tighter inspections, this would not remove Iran's capability to make nuclear weapons but would make it more difficult.

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.

Israeli Prime Minister Benjamin Netanyahu said the interim deal "does not prevent Iran from realising its intention to develop nuclear weapons".

"In a permanent agreement, the international community must get the Iranian nuclear train off the track. Iran must never have the ability to build an atomic bomb.

"The time has come that the international community, which has been making things easier for Iran and giving it legitimacy of late, also demand that it halt its calls for the destruction of Israel and stop funding terror organisations: Hamas, Hezbollah and Islamic Jihad," said Netanyahu.

burs/tl/dv