Iran 'surprised' by UK diplomatic downgrade

Iran expressed surprise yesterday at Britain's furious reaction to its rejection of David Reddaway as the new British ambassador to Tehran. The Government swiftly downgraded the status of the Iranian diplomatic representation to the level of chargé d'affaires after saying on Thursday that the decision by Tehran would inevitably affect relations.

Denying the move amounted to tit-for-tat retaliation, Tony Blair's official spokesman said the Government would continue to "engage" with Iran to encourage moderates in its administration.

"I think everyone knows there is a debate within Iran about which direction it should go in, and it should come as no surprise therefore that decisions are sometimes made that disappoint us. The point is, do we continue with engagement, and we do believe we can only make the points we want to put, such as the need to end support for terrorism, by engagement, and we will remain engaged."

The Iranian foreign ministry spokesman, Hamid Reza Asefi, said: "This is not an unprecedented affair. It has happened many times in the diplomatic relations of various countries without overshadowing their ties."

Hardline Iranian newspapers have said Mr Reddaway, who is married to an Iranian and speaks fluent Farsi, is Jewish and has links with British intelligence.

British officials deny both claims about the veteran diplomat who served in Iran in the Seventies and the Nineties.

His posting appears to have fallen victim to the hardline attitude taken by the American President, George Bush, in his state of the union address last week, when he included Iran with Iraq and North Korea in an "axis of evil".