* Uranium spinning is heart of Iran-West standoff
* Tehran says responding to sanctions, military accusations
* France calls move "provocation", U.N. watchdog awaits word
(Adds detail on IAEA meeting, analyst, paragraphs 10-11)
By Robin Pomeroy and Mitra Amiri
TEHRAN, June 8 (Reuters) - Iran will shift its production of higher-grade uranium to an underground bunker and triple production capacity, it said on Wednesday in a defiant response to charges of trying to make atomic bombs.
"This year, under the supervision of the (International Atomic Energy) Agency, we will transfer 20 percent enrichment from the Natanz site to the Fordow site and we will increase the production capacity by three times," state broadcaster IRIB quoted the head of Iran's atomic energy agency, Fereydoun Abbasi-Davani, as telling journalists after a cabinet meeting.
Iran only disclosed the existence of Fordow, a mountain bunker near the clerical city of Qom, in September 2009, after Western intelligence had detected it and said it was evidence of covert nuclear work.
The decision to move and boost production drew immediate censure from the West, which has imposed a series of sanctions on Iran to try to force it to halt enrichment -- a process that can make weapons material if done to a much higher level.
Holing up in Fordow could provide greater protection for Iran's sensitive, uranium-purifying centrifuges in the face of threatened U.S. and Israeli air strikes.
"This announcement is a provocation," the French Foreign Ministry said in a statement.
"It reinforces the international community's existing concerns over the intransigence of the Iranian authorities and their persistent violation of international law."
Iran denies seeking nuclear weapons and says it is enriching uranium for electricity production and medical applications.
But its decision last year to raise the level of enrichment from the 3.5 percent purity needed for normal power plant fuel to 20 percent worried countries that saw it as a significant step towards the 90 percent needed for bombs.
The In1stitute for Science and International Security, a U.S.-based think-tank, said that the Fordow plan could, a year after its implementation, enable Iran "to more quickly break out and produce enough weapon-grade uranium for a nuclear weapon, if it chose to do so".
The Vienna-based IAEA, whose 35-nation board began a discussion on Iran's nuclear programme on Wednesday, said it had only learned of the plan from media reports.
"Iran has not yet informed the agency of any such decision," IAEA spokeswoman Gill Tudor said.
The European Union said it noted the announcement with deep concern and said Iran was "further exacerbating its defiance" of the U.N. Security Council.
Iranian media portrayed the announcement as a defiant response to tightened sanctions and IAEA chief Yukiya Amano's assertion on Monday that he had received new evidence of possible military dimensions to Iran's nuclear work.
President Mahmoud Ahmadinejad accused Amano of taking orders from Washington.
After Ahmadinejad said on Tuesday that no incentive from world powers could persuade Iran to give up enrichment, President Barack Obama said further sanctions were likely.
"Iran certainly is raising the stakes," said proliferation expert Mark Fitzpatrick at the London-based International Institute for Strategic Studies.
"There is absolutely no justification for producing any more 20 percent enriched uranium at all, since any reactors that would use it are far off into the future," he said. "Tripling the production rate would be highly provocative."
Iran says it needs 20 percent uranium to make fuel for a medical research reactor after talks on a swap -- under which other countries would have supplied the material -- broke down.
"After we increase the production capacity in Fordow by three times, then we will stop the 20 percent section of the Natanz site and will transfer it completely to Fordow," Abbasi-Davani said, adding the transfer would start this year.
In its latest report on Iran, in late May, the agency said Iran had told it in February of plans to begin feeding nuclear material into enrichment cascades at Fordow "by this summer".
But the IAEA added that as of May 21 no centrifuges had been introduced into the facility.
Abbasi-Davani said Iran had completed technical development of a new generation of centrifuges and they would be installed at both sites. (Additional reporting by Fredrik Dahl and Sylvia Westall in Vienna and Vicky Buffery in Paris; Writing by Robin Pomeroy; editing by Dan Williams)