The 15 British service personnel held by Iran have been pardoned and freed, Iranian President Mahmoud Ahmadinejad announced today.

He said they would be taken immediately to Tehran Airport and called their release "a gift" to Britain to mark the birthday of Islam’s Prophet Mohammed and Easter.

Downing Street swiftly issued a statement saying: "We welcome what the President has said about the release of our 15 personnel.

"We are now establishing exactly what that means in terms of the method and timing of their release."

Mr Ahmadinejad’s dramatic announcement came during a long news conference in Tehran, during which he also theatrically decorated the coastguards he said had captured the sailors and marines.

The Iranian President earlier insisted Iran would never accept trespassing of its territorial waters.

"On behalf of the great Iranian people, I would like to thank the Iranian coastguard for courageously defending our Iranian territorial waters," the president added.

He then pinned medals on the chests of the three coastguard officers.

Mr Ahmadinejad also homed in on the plight of Leading Seaman Faye Turney, the only female captive, questioning why such a difficult job had been given to a mother.

"Why is there no respect for motherhood, affection?" he demanded.

He continued: "The Government of Mr Blair chose to take the conflicting approach and took the issue to the Security Council. Why did the Security Council issue a statement without taking all the evidence into account?

"People wonder why and people wonder where is the Security Council going to? What’s the direction?

"And then Iran is accused and then Iran is asked to release the detainees. Would the same people want their land to be violated?"

The news conference was being eagerly watched both in Whitehall and by the families of the sailors and marines in their homes.

They were captured after boarding an Indian merchantman in what the UK has insisted were Iraqi territorial waters 13 days ago.

News of the promised release came after the UK was today said to have begun direct negotiations with the Iranian government through its chief negotiator Mr Ali Larijani.

No 10 refused to confirm a report that the Prime Minister’s chief foreign affairs adviser Sir Nigel Sheinwald had taken personal charge of the talks and spoken to Mr Larijani himself.

President Ahmadinejad also attacked the stance of the European Union.

"Is this the kind of attitude, manner that we want to run Europe - this is the European Union - without investigating they announce a certain stance.

"Respect for sovereignty - is it just a claim or is it a fact?"

And he suggested that the UK Government was not disclosing the truth about the situation to the public.

"The English government may not have even the courage to tell its own people about this," he claimed.

"We leave the judgment to the people of the world and the people of England."

The release of the 15 captured British personnel will come as a "profound relief" to their families, Prime Minister Tony Blair said today.

He said the loved ones of the sailors and marines held by Iran had endured "distress and anxiety".

And the premier stressed Britain had taken a "firm but calm" approach to dealing with the Tehran regime.

Speaking in Downing Street, Mr Blair said: "I’m glad that our 15 service personnel have been released. I know their release will come as a profound relief not just to them but to their families who have endured such distress and anxiety.

"Throughout we have taken a measured approach - firm but calm, not negotiating, but not confronting either."