Israeli Prime Minister Benjamin Netanyahu accused the International Atomic Energy Agency (IAEA) on Sunday of ineffectually policing Iran's nuclear activities.

Referring to the agencies latest report on its attempts to resolve outstanding issues with Tehran, Netanyahu in unusual criticism suggested the UN watchdog risked becoming politicized and irrelevant.

The IAEA issued the report in late May saying that Iran had provided a satisfactory answer on one case of suspect uranium particles and allowed the IAEA to re-install some monitoring equipment originally put in place under the now-defunct 2015 JCPOA nuclear deal.

The re-installed equipment is a fraction of what the IAEA had planned to set up to improve its surveillance of Iran's nuclear activities, as the IAEA said it had agreed with Iran in March in a bid to defuse a standoff between both sides over Iran's cooperation.

Iran began restricting IAEA access to its nuclear installations in 2021 and increased the level of uranium enrichment just as the United States announced its readiness to begin negotiations to revive the JCPOA. Tehran increased restrictions on monitoring access as talks continued to revive the agreement.

With Iran having enriched enough uranium to 60% fissile purity for two nuclear bombs, if refined further - something it denies wanting or planning - Israel has redoubled threats to launch pre-emptive military strikes if international diplomacy fails.

"Iran is continuing to lie to the International Atomic Energy Agency. The agency's capitulation to Iranian pressure is a black stain on its record," Netanyahu told his cabinet in televised remarks.

"If the IAEA becomes a political organization, then its oversight activity in Iran is without significance, as will be its reports on Iran's nuclear activity."

The IAEA did not immediately respond to a Reuters request for comment.

The agency reported that after years of investigation and lack of progress, Iran had given a satisfactory answer to explain one of three sites at which uranium particles had been detected.

Those particles could be explained by the presence of a Soviet-operated mine and lab there and the IAEA had no further questions, a senior diplomat in Vienna said.

In an apparent reference to this, Netanyahu said: "Iran's excuses ... regarding the finding of nuclear material in prohibited locations are not only unreliable, they are technically impossible."

However, the Vienna diplomat also told Reuters the IAEA's assessment remained that Iran carried out explosives testing there decades ago that was relevant to nuclear weapons.

After former US President Donald Trump pulled out of that deal in 2018 and re-imposed sanctions, Iran breached the deal and moved beyond its enrichment level of 3.65 percent purity. By early 2021, as the new Biden administration signaled its readiness to re-enter the agreement, Tehran adopted a tough position and began enriching up to 20 and then 60-percent, to the point IAEA chief Rafael Grossi has called the deal an "empty shell" and diplomats say there are scant chances of reviving it.

Netanyahu has previously said that 90-percent enrichment by Iran is a "red line" that could trigger pre-emptive strikes. Experts are divided, however, on whether Israel - despite having an advanced military believed to be nuclear-armed - can deal lasting damage to Iran's distant, dispersed and well-defended facilities.

"In the event that we reach decision-point, where the two options are the Iranians breaking out to a bomb or us taking action, we will take action," Israeli Energy Minister Israel Katz, a member of Netanyahu's national security cabinet, said.

"We are making all of the preparations at this very moment," Katz told Galey Israel radio.

With reporting by Reuters