Iran’s President Mahmoud Ahmadinejad has announced that his country now has the capacity to enrich uranium to 80 per cent, enough to produce nuclear weapons.

In a speech to hundreds of Iranians in Tehran’s central square, marking the 31st anniversary of the Islamic revolution, Mr Ahmadinejad said: “If we wanted to manufacture a bomb, we would announce it ... our nation has the courage to explicitly say it and build it and not fear you."

Iran has managed to produce uranium enriched to 20 per cent just two days after they announced they were beginning the process.

Mr Ahmadinejad said: "We have the capability to enrich uranium more than 20 percent or 80 per cent but we don't, because we don't need it."

But, despite cheering in support of the President, crowds of protesters chanting “Death to the Dictator” was audible on state television broadcasts of Mr Ahmadinejad’s speech.

In central Tehran, Iranian riot police have shot at protesters chanting slogans against the Supreme Leader Ayatollah Khameni.

Protests against the Iranian regime are expected to be at their highest today since the controversial re-election of Mr Ahmadinejad in December, and much of the capital’s email and phone systems have been reportedly shut down by the state.

UN officials told Ha’aretz that the Security Council is considering tightening sanctions on Iran in wake of its enhanced nuclear capacity.

A potential Chinese veto on further sanctions is currently the only barrier to increasing the pressure on Iran, after Russia announced it was willing to back sanctions.

But Beijing is said to favour further diplomatic efforts.