Iranian television showed off yesterday some of 15 British sailors and marines detained at sea last week, upping the ante after Britain halted official contacts with Iran.
Tehran said earlier it would free a woman among the 15 soon. Britain said the broadcast, in which the female sailor was shown saying "obviously we trespassed into their waters", was "completely unacceptable". It also expressed concern the Britons may have been coerced into speaking.
British officials have had no access to the group, detained at a time of high tension between Iran and Western countries over Tehran's nuclear programme.
Britain said there was no doubt they were in Iraqi waters and entitled to be there when they were seized, repeating a demand they be released.
An official Iranian news agency said some of the other sailors had also admitted to entering Iranian waters and expressed regret, quoting an unnamed Iranian official.
Iran's Foreign Minister Manouchehr Mottaki told BBC television the crisis would be solved "based on rules and regulations" and added: "The lady will be released very soon."
"The real picture is that the British sailors were arrested in the territorial waters of Iran... this must be accepted by the government of the UK," Mr Mottaki said in Riyadh. British Foreign Secretary Margaret Beckett earlier told parliament Britain would freeze all official bilateral business with Iran apart from efforts to resolve the crisis.
"I am very concerned about these pictures and any indication of pressure on or coercion of our personnel who were carrying out a routine operation in accordance with international law and under a United Nations resolution in support of the Iraqi government," Ms Beckett said in a statement after the broadcast.
British officials could not confirm the woman would be freed. She was named by British media as 26-year-old Faye Turney and said to be married with a three-year-old daughter.
A letter, the Iranian embassy in London said she had written to her parents, said: "Hopefully it won't be long until I am home to get ready for Molly's birthday party..."
Al-Alam, a state-run Arabic-language television, showed Ms Turney and several of the other sailors in uniform eating off plastic plates in a well-lit room. It also showed an interview with Ms Turney, wearing a headscarf and smoking a cigarette.
"I was arrested on Friday the 23rd of March. Obviously we trespassed into their waters," Ms Turney said, speaking calmly.
Britain's Defence Ministry said global positioning data showed the British sailors and marines were 1.7 nautical miles within Iraqi waters when they were captured by Iranian gunboats near the waterway that separates Iran and Iraq.
"The boats remained throughout well within Iraqi territorial waters," Britain's Deputy Chief of Defence Staff, Vice Admiral Charles Style, told a news conference.