Iran's government has approved plans to build 10 new uranium enrichment plants, according to state media.
The government told the Iranian nuclear agency to begin work on five sites, with five more to be located over the next two months.
It comes days after the UN nuclear watchdog rebuked Iran for covering up a uranium enrichment plant.
The White House said the move was "yet another serious violation of Iran's clear obligations".
Meanwhile, Britain described the news as "a matter of serious concern" and potentially a "deliberate breach" of UN resolutions.
Western powers say Iran is trying to develop nuclear arms. Iran says its nuclear programme is peaceful.
The country insists it is only doing what is allowed under the nuclear non-proliferation treaty.
But a UK Foreign Office spokesman said: "Reports that Iran is considering building more enrichment facilities are clearly a matter of serious concern.
"It would be a deliberate breach of five UN security council resolutions. We will need to consider our response."
White House spokesman Robert Gibbs said in a statement: "If true, this would be yet another serious violation of Iran's clear obligations under multiple UN Security Council resolutions and another example of Iran choosing to isolate itself.
"Time is running out for Iran to address the international community's growing concerns about its nuclear programme."
'Hard line'
BBC Tehran correspondent Jon Leyne says Iran's move is a massive act of defiance that is likely to bring forward a direct confrontation over Iran's nuclear programme.
The West will fear this move will speed up Iran's ability to make a nuclear bomb, our correspondent adds.
President Ahmadinejad's immediate purpose may be to up the stakes in the diplomatic standoff, and use the issue to try to consolidate his position at home.
By taking such a hard line, the president could outmanoeuvre critics trying to use the nuclear issue against him, our correspondent adds.
Iran says the new plants would be of a similar size to its main existing one at Natanz.
President Mahmoud Ahmadinejad told his cabinet that parliament had ordered that Iran should produce 20,000 megawatts of nuclear energy by 2020.
It therefore needed to make 250-300 tonnes of nuclear fuel a year, he said, which would require 500,000 centrifuges for enriching uranium.
Natanz has nearly 5,000 working centrifuges, with plans to build 54,000 in all.
Under the plan Mr Ahmadinejad presented to the cabinet, the level of enrichment would also be increased.
On Friday, the International Atomic Energy Agency (IAEA) passed a resolution that was heavily critical of Iran for covering up a uranium enrichment plant near the town of Qom.
Earlier on Sunday it was reported that the Iranian parliament had urged President Mahmoud Ahmadinejad's government to reduce co-operation with the IAEA.
