* Iran to halt sensitive nuclear work under deal with powers
* To get limited sanctions relief in return
* Accord aims to buy time for talks on final settlement
* Israel: increasing concerns about Iran bomb-related work
The implementation of a landmark deal between Iran and world powers to curb Tehran's nuclear programme in return for some sanctions relief is expected to start by early January, its envoy to the U.N. atomic agency said on Friday.
The Nov. 24 interim accord between the Islamic Republic and the United States, France, Germany, China, Russia and Britain is seen as a first step towards resolving a decade-old dispute that has stirred fears of a new Middle East war.
Israel, believed to be the region's only nuclear-armed state, has denounced the deal as an "historic mistake" since it does not dismantle its arch foe's uranium enrichment programme. The Jewish state sees Iran as a threat to its existence.
Israel's ambassador to the U.N. International Atomic Energy Agency told an IAEA board meeting that "the increasing concerns regarding Iran's activities related to nuclear weapons should be thoroughly investigated and clarified".
The agreement between Iran and the six powers is designed to halt any further advances in Iran's nuclear campaign and to buy time for negotiations on a final settlement.
After years of confrontation, it has underlined a thaw in relations between Iran and the West after the election in June of a relative moderate, Hassan Rouhani, as Iranian president on a pledge to end Tehran's isolation and win some relief from sanctions that have battered the oil producer's economy.
Iran agreed under last Sunday's accord to stop its most sensitive nuclear work - uranium enrichment to a fissile concentration of 20 percent - and cap other parts of its activity in exchange for some limited easing of sanctions, including on trade in petrochemicals and gold.
Refined uranium can fuel nuclear power plants but also the fissile core of a bomb if processed to a high degree.
Iranian Ambassador Reza Najafi told reporters on the sidelines of the IAEA meeting he expected the implementation of the six-month agreement to start either at the end of December or the beginning of January.
Asked when Iran would stop its higher-grade enrichment, Najafi said: "We need first to have a meeting for coordination and as soon as we agree on a date we will start implementing the measures agreed by Iran."
Iran says the nuclear programme is a peaceful energy project but the United States and its allies suspect it has been aimed at developing the capability to make nuclear arms.
Western diplomats said sanctions relief should enter into force all at once, at an implementation date that is yet to be decided. That date will depend on verification by the IAEA that Iran is fulfilling its end of the bargain.
No new sanctions on Iran would be introduced while the details of the implementation were being worked out, they said.
Western officials and experts caution that finding a permanent solution to the dispute will probably be an uphill struggle, with the two sides still far apart on the final scope and capacity of the Iranian nuclear programme.
Israeli Ambassador Merav Zafary-Odiz told the IAEA board that Iran, which does not recognise Israel, was selective in its cooperation with an IAEA probe into suspected atomic bomb research by Tehran, which denies the charge.
"Genuine Iranian willingness to provide full access to information, documents, facilities, locations and people to the IAEA will most certainly lead to some very troubling conclusions regarding the military dimensions of Iran's nuclear programme," the ambassador said, according to a copy of her speech.
"To the best of our understanding, the senior officials who worked in the Iranian defence ministry in the weapons programme until 2003 continue to operate in the defence ministry in an organization called today the Organization of Defensive Innovation and Research, or SPND," she said.
Iran has repeatedly rejected such accusations, saying it is Israel's assumed atomic arsenal that threatens regional peace.
Najafi told the board Israel had 200 nuclear warheads, adding: "All of them are targeted at Muslim cities." He said the "warmongers in Tel Aviv" previously had secret nuclear cooperation with "another racist regime of apartheid", in a clear reference to formerly minority white-led South Africa.
U.S. Ambassador Joseph Macmanus said Najafi's comment was "inflammatory, irrelevant to the issue ... and wrong".