Iran said today that it was ready to release British servicewoman Faye Turney, who was seized off the Iraqi coast on Friday.
"Today or tomorrow, the lady will be released," Iranian Foreign Minister Manouchehr Mottaki said on the sidelines of an Arab summit he was attending in the Saudi capital, Riyadh.
The first signs of a breakthrough in the crisis came less than two hours after Prime Minister Tony Blair vowed to "ratchet up" the pressure on Tehran over the detention of the 15 Royal Navy sailors and Royal Marines held last week.
Earlier, the Ministry of Defence set out the evidence which, it said, showed that the group had been seized by the Iranians in Iraqi territorial waters.
The Prime Minister told MPs that the continued detention of the eight Royal Navy sailors and seven Royal Marines seized on Friday was "completely unacceptable, wrong and illegal".
In a Commons statement, Foreign Secretary Margaret Beckett announced a "freeze" on all other bilateral relations with Tehran until the issue was resolved.
Mr Mottaki, however, sought to play down the crisis, suggesting for the first time that the Royal Navy party may have entered Iranian waters - as the Iranians maintain happened - by mistake.
"This is a violation that just happened. It could be natural. They did not resist," he said.
He continued to reject Britain’s assertion that the incident took place in Iraqi waters.
"That’s not true. It happened in Iranian territorial waters," he said.
Earlier, Deputy Chief of the Defence Staff, Vice Admiral Charles Style, gave detailed co-ordinates which he said showed that the party had been seized 1.7 nautical miles inside Iraqi waters.
He also disclosed that the Iranians had changed their account of where the incident had taken place after it was pointed out that the first set of co-ordinates they gave were in Iraqi waters.
"It is hard to understand a reason for this change of co-ordinates. We unambiguously contest both the positions provided by the Iranians," he said.
The boarding party from the Type 22 frigate HMS Cornwall were seized after completing a routine search of a Indian flagged cargo ship.
Admiral Style said that the ship’s master had confirmed his position was 29 degrees 50.36 minutes North, 048 degrees 43.08 minutes East, placing the vessel well within Iraqi waters.
The MoD backed up its assertion by releasing a photograph of a handheld global positioning satellite device in HMS Cornwall’s Lynx helicopter as it overflew the ship, confirming its position.
Admiral Style said that coalition forces backed by the Iraqi Navy had carried out 66 such boardings in the northern Gulf since early March - four of them in the same area as the Royal Navy party were seized.
He said interviews with the Lynx crew, which was in the air at the time, and the master of the cargo ship, indicated they had been "ambushed" by Iranian Republican Guard patrol boats as they were disembarking from the ship.