Iran's media has claimed authorities have arrested a spy working for British intelligence agency MI6, www.independent.co.uk reported.
The Iranian semi-official ISNA news agency said today the man, who has not been identified, was arrested in the southeastern Iranian town of Kerman after authorities spent months tracking him down.
A Kerman judiciary official, who was not named by the news agency, said the man had exchanged information with four British intelligence operatives. The report said the man is currently standing trial and has confessed to the charges.
The UK foreign office has said it does not comment on intelligence matters, according to the BBC.
It has not been suggested that the alleged spy is a Briton, and Tehran has a history of announcing the arrest of people it claims are spying without releasing further details.
But the news is potentially embarrassing at a time when relations between the UK and Iran had been improving, including the first visit by a British diplomat for two years
The arrest comes as Iran and Britain are repairing ties following the election of moderate President Hassan Rouhani in June. The British Embassy in Tehran was shut down in 2011 after hardliners overran the building.