British Prime Minister Tony Blair said Thursday Britain would pursue a policy of "critical engagement" with Iran, and urged the Gulf country to comply with international demands on nuclear power.
"We have a policy of, I would describe it actually, as critical engagement," Blair told his monthly news conference at Downing Street.
"We are engaged with Iran. We have a dialogue with their leadership, but we are under no illusions," Blair said.
"It is important both that they adhere completely to the demands of the international community in respect of nuclear weapons and that they cease all support of terrorist groups," Blair said, "Until those two things are done, that engagement is going to remain critical."
The United States has accused Iran of developing a secret nuclear weapons program in violation of the Nuclear Nonproliferation Treaty, and of supporting terrorism, two charges Tehran has strongly denied.
Relations between Britain and Iran have been strained after British police last month arrested a former Iranian diplomat allegedly related with the 1994 bombing of a Jewish center in Argentina that killed about 85 people.
Hade Soleimanpour, who had been in Britain since last February and worked as a research assistant at Durham University, was arrested on an international extradition warrant issued by Argentina, which had long believed Iran was behind the Buenos Aires bomb attack, a charge Tehran has repeatedly denied.
Britain, which denied the arrest was "politically motivated," denied bail last Friday to the former Iranian ambassador to Argentina.
Iran's ambassador to Britain was called back to Tehran after reports said he had failed to win concessions following the arrest of Soleimanpour.
Amid the growing dispute between the two countries, the British embassy in Tehran was forced to be closed Wednesday after being hit by a number of shots fired from a nearby street.