Iran has admitted that a data-mining virus dubbed 'Flame' had caused substantial damage and massive amounts of data had been lost in what may be most destructive cyber attack on the nation.

The virus also damaged centrifuges operating at its uranium enrichment facility at Nantaz as reports said that even computers of high-ranking officials had been penetrated.

Tehran's reaction came a day after Russia-based Internet security company Kaspersky Lab uncovered the virus 'Flame' which it said attacked computers in Iran and elsewhere in Middle East and may have been designed to collect and delete sensitive information.

Iran's MAHER Center, which is part of the Islamic Republic's Communication ministry, said that the virus "has caused substantial damage" and that "massive amounts of data have been lost," Ynetnews reported.

Iranian authorities admitted that the malicious software "Flame" has attacked its computer and systems and instructed to run an urgent inspection of all cyber systems in the country.

New York Times said the computers of high-ranking Iranian officials appear to have been penetrated in what it said may be the most destructive cyberattack on Iran since the notorious Stuxnet virus, an Iranian cyberdefence organisation had confirmed.

In a message posted on its Web site, Iran's Computer Emergency Response Team Coordination Center warned that the virus was dangerous.

An expert at the organisation said that it was potentially more harmful than the 2010 Stuxnet virus, which destroyed several centrifuges used for Iran's nuclear enrichment programme.

In contrast to Stuxnet, the newly identified virus is designed not to do damage but to collect information secretly from a wide variety of sources.

Flame, which experts say could be as much as five years old, was discovered by Iranian computer experts.

Kaspersky Lab, a Russian producer of antivirus software, said in a statement that "the complexity and functionality of the newly discovered malicious program exceed those of all other cyber menaces known to date."

The virus bears special encryption hallmarks that an Iranian cyberdefence official said have strong similarities to previous Israeli malware.

"Its encryption has a special pattern which you only see coming from Israel," said Kamran Napelian, an official with Iran's Computer Emergency Response Team.

"Unfortunately, they are very powerful in the field of IT"

But Iran's telecommunications ministry also claimed that it had developed software to clean this malware.

Israel avoids comments on such matters, its involvement was hinted at by top officials there.

"Anyone who sees the Iranian threat as a significant threat ? it?s reasonable that he will take various steps, including these, to harm it," said the vice prime minister and strategic affairs minister, Moshe Yaalon, in a widely quoted interview with Israel?s Army Radio yesterday.

Napelian said that Flame seemed designed to mine data from personal computers and that it was distributed through USB sticks rather than the Internet, meaning that a USB has to be inserted manually into at least one computer in a network.

"This virus copies what you enter on your keyboard; it monitors what you see on your computer screen," Napelian said.

That includes collecting passwords, recording sounds if the computer is connected to a microphone, scanning disks for specific files and monitoring Skype.

"Those controlling the virus can direct it from a distance," he said.

"Flame is no ordinary product. This was designed to monitor selected computers."

Napelian guessed the virus had been active for the past six months and was responsible for a "massive" data loss. Iran says it has developed antivirus software to combat Flame, something that international antivirus companies have yet to do, since they have just become aware of its existence.

"One of the most alarming facts is that the Flame cyberattack campaign is currently in its active phase, and its operator is consistently surveilling infected systems, collecting information and targeting new systems to accomplish its unknown goals," Alexander Gostev, chief security expert at Kaspersky Lab, said on the company's Web site.