"The Iranians have manipulated Turkey and Brazil," the official told AFP on condition of anonymity.

"The Iranians have already pulled off such a trick in the past -- by pretending to accept such a procedure to lower tensions and reduce the risk of harsher international sanctions, then refusing to follow through," he said.

Top diplomats from Iran, Brazil and Turkey on Monday inked a deal under which Iran will ship 1,200 kilograms (2,640 pounds) of low enriched uranium to Turkey, and in turn will receive 120 kg of nuclear fuel for its Tehran reactor.

The agreement was signed in Tehran following three-way talks between Iranian President Mahmoud Ahmadinejad, Brazilian President Luiz Inacio Lula da Silva and Turkish Prime Minister Recep Tayyip Erdogan.

The move looks set to ease pressure on Iran, which has been facing a growing threat of new UN sanctions over its controversial atomic programme.

Shortly after the deal was signed, Turkey said it saw "no need" for further UN sanctions against Iran.

"This agreement should be regarded positively and there is no need for sanctions now that we (Turkey and Brazil) have made guarantees and the low enriched uranium will remain in Turkey," Turkish Foreign Minister Ahmed Davutoglu said.

The Israeli official said the fuel swap arrangement would "radically complicate" efforts by world powers looking to rein in Iran's nuclear programme by means of sanctions.

"It is going to be much more difficult for the United States or the Europeans to reject this arrangement because we won't be only dealing with Iran, which is much easier to handle, but with rising powers, such as Brazil and Turkey, with whom relations are very sensitive," he said.

Turkey and Brazil are both non-permanent members of the UN Security Council.

Once flourishing relations between Israel and Turkey, its only ally in the Muslim world, deteriorated sharply after Israel launched its devastating 22-day Gaza offensive in December 2008 and have remained testy since.

Israel public radio, quoting senior officials, said the three-way initiative "would aggravate the Iranian problem by complicating US and European efforts to achieve a vote in favour of sanctions".

"The Iranian nuclear installations are going to continue working and Tehran will pursue its efforts to obtain a military nuclear programme while developing long-range missiles," it said.

So far, Ankara and Brasilia have resisted US-led efforts to push through further sanctions over Iran's failure to suspend its sensitive uranium enrichment activities.

Israel, the region's sole if undeclared nuclear-armed state, has long viewed Iran as its greatest strategic threat because of Tehran's nuclear programme and its leaders' repeated predictions of the demise of the Jewish state.

Like its close ally the United States, Israel has refused to rule out military action to halt Iran's nuclear drive despite Tehran's insistence that its programme is purely for civilian purposes.

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