British Foreign Secretary William Hague says "circumstances are right" for the reopening of Britain's embassy in Iran, Press TV reported.
Addressing the British parliament in a written statement on Tuesday, Hague expressed his satisfaction that British embassy staff would be safe in the Iranian capital of Tehran and that diplomats would be allowed to work without hindrance.
He said the two sides first need to resolve "a range of practical issues" before the embassy can restart operations.
"It is our intention to reopen the embassy in Tehran with a small initial presence as soon as these practical arrangements have been made," the foreign secretary added.
In November 2011, Iranian lawmakers voted by a large majority to downgrade diplomatic ties with the UK in response to Britain's decision to impose sanctions on the Central Bank of Iran over the allegation that Tehran is pursuing non-civilian objectives in its nuclear energy program.
Hague announced on November 30, 2011, that London is withdrawing its diplomatic staff from Iran and that the Iranian Embassy in London would be closed.
Iran and Britain agreed in October last year to appoint non-resident chargés d'affaires as a first step towards reopening their respective embassies.
The development followed a September 2013 meeting between Iranian Foreign Minister Mohammad Javad Zarif and his British counterpart in New York, during which they discussed ways to improve Tehran-London ties based on mutual respect.