Britain on Wednesday ordered the immediate closure of Iran's embassy in London and said Tehran's diplomats must leave within 48 hours, Foreign Secretary William Hague told parliament in London, reported dpa.
He said Britain had closed its embassy in Tehran and evacuated all staff following the storming of the mission by protestors on Tuesday.
The decision marks a sharp escalation in tension between the two countries following Tuesday's protests in which the main embassy building was set on fire.
A country which failed to protect diplomats, as required under the Vienna Convention, could not expect Britain to host its diplomats, said Hague.
He stressed that the move did not represent a "severing of diplomatic relations in their entirety," but was reducing them to the "lowest level" possible.
Hague said that while Iran's relations with Britain, and other western nations, were "difficult," that was "no excuse" for the "grave violation" of the Vienna Convention on diplomatic relations.
He thanked the United Nations, the United States and many other countries for the support they had shown for Britain over the incident. Turkey had been especially helpful, said Hague.
A group of Iranian students on Tuesday stormed the British embassy in Tehran, tearing up documents and pictures of Queen Elizabeth II, in the latest instalment of a brewing diplomatic row between the two countries.
Another group of students entered the residential compound of the British embassy's diplomats and staff in north Tehran, where some foreign schools are also located.
Meanwhile, police authorities in Tehran announced Wednesday they had made several arrests in the wake of the embassy invasion.
IRNA news agency quoted Ahmad-Reza Radan, Iran's deputy police chief, as saying that further measures have been taken to arrest all the intruders.
The Iranian Foreign Ministry distanced itself from the incident, saying it was a spontaneous act by students and not approved by the administration.
Parliament Speaker Ali Larijani meanwhile criticized London's decision to withdraw some diplomatic staff from Tehran, saying that the British government should not misuse the students' move for political benefit.
Early Wednesday the British embassy was protected by a line of police cars, with plainclothes security agents also present on the Ferdowsi Avenue in downtown Tehran where the embassy is located.
Workers were also setting up fences alongside the embassy wall.
Local journalists said that the order for the new fence came from the Interior and Foreign Ministries and was to improve security in case of another attack.