"We call for freezing all agreements with Iran… The government should recall our ambassador from Tehran and expel the Iranian ambassador from Kuwait," hardline Salafi MP Mohammad Hayef told reporters.
Hayef, who is well known for his anti-Iran stance, warned that if the government does not clarify its position "we will call for a special debate in parliament over the spy cell."
Citing a high-ranking security source, Al-Qabas daily reported on Saturday that security agencies had dismantled a spy cell working for Iran's elite Revolutionary Guards Corps.
The Iranian embassy has denied the information in the report.
Independent MP Shuaib al-Muwaizri, the spokesman for parliament's interior and defence committee, called for the expulsion of the Iranian envoy in Kuwait "if the news about the spy cell is proved."
"We hope that the government releases a statement on the issue and if it is true, the government must act decisively by asking the Iranian ambassador to leave Kuwait," Muwaizri told reporters.
Later on Sunday, the government broke two days of silence but said only that investigations were under way and will be referred to court when complete, without providing details or naming Iran.
"Security agencies investigate whatever information they receive, including what has been reported lately," government spokesman Mohammed al-Baseeri said in a statement cited by the official KUNA news agency.
"The agencies are completing their investigation and procedures in prelude to referring it to court." He called local media reports on the issue "inaccurate."
Tehran's embassy in Kuwait City strongly denied the reports about a spy cell, saying in a statement that such reports aim to undermine the strong ties between Kuwait and Iran.
In Tehran, the foreign ministry said that the allegations were designed to create a climate of fear, and a Revolutionary Guards official called them "baseless."
"This kind of information is aimed at creating a climate of fear towards Iran," spokesman Ramin Mehmanparast told Iran's Arabic-language Al-Alam television.
Guards spokesman Ramezan Sharif told the Fars news agency: "It is clear to all that the Revolutionary Guards are the first line of defence of the Islamic revolution and Iran's national interests.
"This power pushes enemies to imagine baseless information to prevent the strengthening of the Revolutionary Guards."
Kuwait's Al-Qabas said on Saturday that at least seven members of the alleged cell, some serving in the army and police, had been arrested.
It said they were assigned to monitor Kuwaiti and US military bases and inform the Guards.
The daily said on Sunday that the cell included six Kuwaitis and two bidoon, or stateless Arabs, in the army and that two Lebanese residents of Kuwait played an important role in the cell, with one financing it.
The other Lebanese passed information from the cell to a Guards liaison officer who met cell members in the Iranian cities of Mashhad and Isfahan.
