British Prime Minister Tony Blair warned Tehran yesterday of a "different phase" if it does not free 15 British military personnel captured in the Gulf four days ago.
The sailors' capture and new UN sanctions imposed on Tehran on Saturday over its disputed nuclear programme have stoked tensions between the West and Iran and pushed oil prices to a 2007 high.
Russia and the United Arab Emirates yesterday urged Iran to comply with UN demands that it halt sensitive nuclear work but Tehran says the UN resolution is illegal.
Iran, which denies any intention of making atomic weapons, has said it may charge the two boatloads of British sailors and marines with illegally entering its waters in the northern Gulf. Britain insists they were operating in Iraqi waters.
"What we are trying to do... is to pursue this through the diplomatic channels and make the Iranian government understand these people have to be released and that there is absolutely no justification whatever for holding them," Mr Blair said.
"They have to release them. If not, then this will move into a different phase," he told Britain's GMTV television.
Mr Blair's spokesman said the next step London could take would be to publish proof, in the form of global satellite positioning (GPS) records, that the sailors had not entered Iranian waters.
"We so far haven't made explicit why we know that because we don't want to escalate this," he said. British officials had shown Iran data on the sailors' exact position when seized, a British government source said.
"I am utterly confident that our personnel were in Iraqi waters and not just marginally in Iraqi waters," Mr Blair's spokesman said. Britain has been assured the sailors are well but has not been given access to them or told where they are being held.
"Of course they are in a completely safe place and they are being treated in a humane and Islamic way," Iranian Foreign Ministry spokesman Mohammad Ali Hosseini told state television.
British embassy staff will be allowed to see the sailors only once the preliminary investigation has been completed, an Iranian government spokesman told the IRNA state news agency.
British Foreign Secretary Margaret Beckett telephoned her Iranian counterpart yesterday to demand the sailors' release and spoke "in very robust terms" to "again demand their safe and speedy return and immediate consular access."
Ms Beckett cut short a visit to Iran's neighbour Turkey due to the seizure of the naval personnel, she said in a statement. Earlier, she said Britain would "continue to leave the door open for a constructive outcome".