Hossein Rassam is on trial with Iranian moderates and a French citizen accused of taking part in political unrest following the Islamic Republic's disputed June presidential election — unrest that Iran says Britain and the United States have fuelled.
A spokeswoman for the Foreign Office said Britain's ambassador to Iran was urgently seeking clarification about the trial.
"We will then decide how to respond to this latest outrage," the spokeswoman said.
Iran's semi-official Fars news agency reported that Rassam was on trial for espionage, which carries a potential death penalty, and had confessed in court to Britain's involvement in the unrest.
"This is completely unacceptable and directly contradicts assurances we have repeatedly been given by senior Iranian officials," the spokeswoman said.
"We deplore these trials and the so-called confessions of prisoners who have been denied their basic human rights."
Leading Iranian moderates say the election was rigged in favour of hardline president Mahmoud Ahmadinejad and the resulting dispute has plunged Iran into its biggest internal crisis in 30 years. At least 26 people were killed and hundreds arrested in the unrest.
Britain and other Western nations have had a tense relationship with Ahmadinejad over Iran's nuclear research, which Iran says is for civilian use but which Britain and the United States believe is intended for military purposes.
(Reporting by David Milliken; editing by Michael Roddy)
