Iran's foreign minister says Britain must admit that its 15 sailors mistakenly entered Iranian waters in order to resolve the standoff over their capture.
Manouchehr Mottaki told reporters late Wednesday on the sidelines of an Arab Summit in Saudi Arabia that admitting the mistake will help resolve the crisis.
Britain says global positioning satellite information shows the Britons were in Iraqi waters when they were captured last Friday.
Britain also has frozen "official bilateral business" with Iran, except efforts to gain release of its naval personnel.
Earlier Wednesday, Iranian state television broadcast a video of the British sailors, including the only female captive, Faye Turney.
She was shown saying the group had "obviously trespassed" into Iranian waters.
Britain called the video "completely unacceptable." British Foreign Secretary Margaret Beckett voiced concern that Turney's remarks could have been made under coercion.
British Prime Minister Tony Blair says Iran's seizure of the group was unacceptable and illegal. He and President Bush discussed the incident Wednesday in a videoconference.
The White House said Mr. Bush fully backs Mr. Blair.
Britain says the naval personnel were conducting a routine inspection of a merchant ship in the Shatt al-Arab waterway between Iran and Iraq when they were seized last week.
Some information for this report was provided by AP and Reuters