The British sailors continue to be held  despite international calls for their release

The British military said the shots heard came from a British convoy that was ambushed in the same street as the consulate in central Basra.

Bush said at a news conference: "I support the Blair government's attempts to resolve this peacefully. And I support the prime minister when he made it clear there were no quid pro quos. The Iranians must give back the hostages.

"The British hostages issue is a serious issue because the Iranians took these people out of Iraqi water, and it's inexcusable behaviour."

Britain 'arrogant'

Ali Reza, Al Jazeera's correspondent in Tehran, said Bush's use of the term "hostages" will likely further infuriate Mahmoud Ahmedinejad, Iran's president, who has labelled Britain as "arrogant" for failing to apologise.

Reza said: "Demands from the European Union that they are freed immediately and unconditionally are only antagonising the situation".

Mohammad Ali Hosseini, a spokesman for the Iranian foreign ministry, said: "The recent stance of the European Union officials regarding this issue will not help in solving the problem, but instead it will complicate the issue and might even make it last even longer."

Iran's ambassador to Russia has said the 15 could be tried for violating international law.

Britain said on Saturday that it had sent a letter of response to accusations of "trespassing" in Iranian waters.

Mediation offer

Terry Waite, who was held captive for almost five years in Lebanon the country's civil war, has offered his services to help settle the issue.

Speaking to Al Jazeera on Saturday, Waite said: "I would hope that the Iranians would behave in the same courteous way to me as they've behaved before, would perhaps give me access to the people they've detained just to be assured of their welfare, so that that could be conveyed to their families, and begin to see if we can find a sensible way through this problem."