PITTSBURGH/VIENNA, (Reuters) – U.S. President Barack Obama and the leaders of Britain and France accused Iran on Friday of building a secret nuclear fuel plant and threatened tough new sanctions unless Tehran comes clean about its nuclear program.

Sharpening a standoff with the Islamic Republic, Obama went public with the charge standing shoulder to shoulder with British Prime Minister Gordon Brown and French President Nicolas Sarkozy at a Group of 20 summit in Pittsburgh.

“Iran is breaking rules that all nations must follow … and threatening the stability and security of the region and the world,” Obama said in a stern message just a week before Tehran’s much-anticipated talks with the United States and five other powers known as the P5+1 negotiations.

Iran, which acknowledged the existence of the facility for the first time on Monday in a letter to the International Atomic Energy Agency, insisted the uranium enrichment plant was within the parameters of the U.N. nuclear watchdog’s rules. “We have no secrecy, we work within the framework of the IAEA,” Iranian President Mahmoud Ahmadinejad told Time magazine, saying Tehran was not obliged to inform the Obama administration of every nuclear facility it has.

Western leaders took a different view of Iran’s belated disclosure of the facility, which U.S. officials said Iran had been building for several years inside a mountain close to the holy city of Qom.

The revelation intensified Western fears of an Iranian bid for nuclear weapons. Tehran insists its nuclear program is for peaceful purposes to generate electricity.

Obama said Iran’s action “represents a direct challenge to the basic foundation of the nonproliferation regime.”

Brown accused Iran of “serial deception” in its nuclear program and Sarkozy said Tehran had until December to comply or else face new international sanctions.

Russia said it was alarmed by Iran’s disclosure. China urged Iran to cooperate with the U.N. inspectors but said it still wanted a negotiated solution.

German Chancellor Angela Merkel said her country was “very worried” about Iran’s construction of a second nuclear site.

Heightened tensions between the Western leaders and Iran, the second largest oil producer in the Organization of the Petroleum Exporting Countries, pushed crude prices toward $67 a barrel on Friday.

Since taking office in January, Obama has sought to engage Iran diplomatically but has been met mostly with defiance. “It is time for Iran to act immediately to restore the confidence of the international community by fulfilling its international obligations,” Obama said. “We remain committed to serious, meaningful engagement with Iran to address the nuclear issue through the P5+1 negotiations.”

The IAEA said earlier on Friday that Iran had just told it of a second uranium enrichment plant under construction.

A senior U.S. official said it appeared the facility was at least a few months from having all centrifuges installed and operable. The nascent plant was believed to be designed for about 3,000 centrifuges for enriching uranium.

U.S. officials said Iran started building the covert plant to have an alternate site for possible weapons development since the IAEA’s scrutiny at its already-known Natanz facility made it difficult to conduct such activities there. They said Iran had just learned that U.S., French and British intelligence were aware of the site, so it divulged its existence to the IAEA because it feared the information would soon be made public.

At the United Nations, a senior Iranian official said accusations that the plant was clandestine were “not true.”

The IAEA has asked Iran to provide access to and information about the plant as soon as possible.

IAEA spokesman Marc Vidricaire said Iran had stated it intended to enrich uranium at the new plant, like its Natanz complex that was hidden from the IAEA until 2002, only to the 5 percent level suitable for power plant fuel. “The agency also understands from Iran that no nuclear material has been introduced into the facility,” he said.

The disclosure, extending a history of Tehran withholding nuclear plans from U.N. nonproliferation inspectors, gave grist to Western calls to consider tougher U.N. sanctions against Iran ahead of Oct. 1 talks in Geneva with six world powers. These talks will be a “serious test” of Tehran’s willingness to address concerns about the new plant, a U.S. official said.

Obama shared intelligence on the Iranian plant with Russian President Dimitry Medvedev at talks in New York earlier this week, the U.S. official said.

China was only just informed about it but U.S. ally Israel had already known about it, the official said.

China had said on Thursday that more pressure would not persuade Tehran to stop the atomic weapons program it denies having. The Russians have also been reluctant to join in toughening sanctions against Tehran.

Sarkozy said Iran was taking the international community down a “dangerous” path and threatened new sanctions if Iranian leaders did not change course by December.

Brown said Iran’s defiance should harden the resolve of the international community, which must now “draw a line in the sand” against Tehran.

Iran is under U.N. sanctions for refusing to suspend enrichment and denying access the IAEA needs to clarify Western intelligence indications that Iran has geared nuclear research to developing nuclear bombs, not generating electricity.