The UK and US denied claims by Iranian state media that a prisoner swap was under way after anonymous sources on Sunday said Britain would pay millions of pounds to Tehran to free Iranian-British charity worker Nazanin Zaghari-Ratcliffe.
Hours earlier, UK Foreign Secretary Dominic Raab condemned Ms Zaghari-Ratcliffe's "torturous" treatment by Iran.
She is one of three Iranian-British dual nationals held in Iran and any government deal with Tehran would look to secure the release of all of them.
Anoosheh Ashoori, 66, a retired engineer, is serving a 10-year sentence in Evin prison after being convicted of spying for Israel, despite never having visited the country.
Labour rights activist Mehran Raoof is also being “arbitrarily detained” in Evin.
Iranian state media reported Iran had agreed to release four Americans held on charges of spying in Tehran in exchange for the release of four Iranians detained in Washington and $7bn in frozen Iranian assets.
But US State Department spokesman Ned Price quickly denied the news.
"Reports that a prisoner swap deal has been reached are not true," Mr Price told The National.
“As we have said, we always raise the cases of Americans detained or missing in Iran. We will not stop until we are able to reunite them with their families.”
It is understood that Ms Zaghari-Ratcliffe is being held in Iran, while her husband Richard Ratcliffe said the family “have heard nothing”.
"The release of Nazanin Zaghari-Ratcliffe in exchange for the UK's payment of its £400 million ($552.6m) debt to Iran has been finalised," an Iranian official told state TV.
The British debt to Tehran dates back to 1979 when the shah of Iran ordered UK-made military equipment.
The UK refused to deliver the tanks after the shah was ousted, and admits it owes Iran the money. US sanctions on Iran have made it more complicated to pay back.
“We continue to explore options to resolve this 40-year-old case and will not comment further as legal discussions are ongoing," said a representative of the UK's Foreign Office.
British politicians also denied that there were developments in the aid worker’s long-running case.
“I have spoken to her family and they have heard nothing confirming any of these rumours,” tweeted Tulip Siddiq, Ms Zaghari-Ratcliffe's local MP.
Tom Tugendhat, a member of the House of Commons foreign affairs committee, said: “I’m told the media reports of a deal are wrong. The situation has not changed.”
Mr Raab said Iran was treating Ms Zaghari-Ratcliffe in the “most abusive, torturous way”.
Ms Zaghari-Ratcliffe, who has been detained since 2016, was being held hostage by Tehran for diplomatic leverage, he said.
This year she completed a five-year prison term for espionage charges, but last week she was sentenced to another 12 months in jail after being convicted of "propaganda against the system", charges she denies.
"Nazanin is held unlawfully in my view as a matter of international law," Mr Raab told the BBC.
"I think she's being treated in the most abusive, tortuous way.
"I think it amounts to torture the way she's being treated and there is a very clear, unequivocal obligation on the Iranians to release her and all of those who are being held as leverage immediately and without condition.”
He said the UK government believed Ms Zaghari-Ratcliffe was being held as a hostage.
"I think it's very difficult to argue against that characterisation," Mr Raab said.
"It is clear that she is subjected to a cat-and-mouse game that the Iranians, or certainly part of the Iranian system, engage with and they try and use her for leverage on the UK."
Mr Raab denied that the £400m was delaying her release.
"That is not actually the thing that's holding us up at the moment, it's the wider context," he said.
He referred to coming Iranian presidential elections and negotiations over the nuclear deal Iran signed in 2015 with world powers, the conditions of which it has repeatedly breached since the US withdrew from the accord in 2018.
Ms Zaghari-Ratcliffe was able to serve the latter part of her sentence under house arrest, having spent much of the earlier years in Tehran's notorious Evin prison.
