Iran could take retribution against British troops in Iraq if the British government continues with its leading role in the campaign against the country's nuclear programme, senior defence sources have warned.
The Tehran regime is known to have immense influence with the Shia militias in Iraq and has been accused of directing their violent campaigns.
America and Britain have, in the past, charged Iran with involvement in the supply of explosives used to kill British soldiers in Iraq, although a recent review of intelligence has failed to show a direct link between the bombings and the Tehran regime.
The Iranians are also suspected of involvement in "death squads" responsible for the torture and murder of suspected insurgents.
Iraq's Interior Minister, Bayan Jabr, has been accused of links with the death squads - charges he denies. Mr Jabr is a former commander of the Shia Badr Brigade, which was formed in exile in Iran during Saddam Hussein's regime.
In Basra, the capital of the British-controlled south of the country, the police force has been heavily infiltrated by the Badr Brigade. They are believed to have been responsible for the abduction of two British special forces soldiers who had to be rescued with the storming of a police station.
A defence source said: "It is logistically eminently possible for Iran to take action against British and other coalition forces in Iraq. They have a lot of control over Shia forces and it is a leverage they are prepared to use, as we have seen already.
"It does not even have to be military action for the Iranians to retaliate. We may well see an upping of destablisation efforts if Britain is seen to be leading calls for sanctions. This is something we recognise and we are preparing to meet if necessary."
Meanwhile, another senior military figure, Admiral Sir Alan West, the head of the Royal Navy, warned that any military action against Iran could have "horrendous consequences" and "must be avoided".
Sir Alan said even air strikes - let alone a full-scale invasion - would be extremely problematic and could have "disastrous" results. Sir Alan was the first Western military commander to express his disquiet over the possibility of an armed intervention in the growing crisis over Iran's nuclear programme. It came amid reports that the US and Israel may bomb the nuclear facilities if Tehran refuses to back down from its belligerent stance over its nuclear testing, despite international anger.
Admiral West said: "The consequence of military action would be quite horrendous. We should not do it, the matter should be resolved some other way."
Talking about a previous example - an Israeli strike at Iraq's nuclear plant at Osirak in 1981, Admiral West said: "That was just one target. With Iran you have got to get every single one. There will awful repercussions if that does not happen."