Iranian intelligence authorities have arrested a man on charges of spying for Britain's MI6, the semi-official Fars news agency reported.
The head of the Kerman region's revolutionary court, Dadkhoda Salari, told the FARs agency on Saturday that the suspect made contact with British agents 11 times in recent months, both inside and outside the country.
According to Salari, the suspect has admitted his guilt and is currently on trial.
A spokeswoman for the Britain's Foreign Office said: "We don't comment on intelligence matters."
The report, which the Reuters news agency could not verify, comes at a time when London and Tehran have been taking steps towards restoring diplomatic relations that were broken off after activists stormed the British embassy in Iran in November 2011.
London announced the appointment of Ajay Sharma as non-resident charge d'affaires in Iran in November, and Sharma made his first visit to Iran in that role this month.
In November, six world powers made a breakthrough deal for Tehran to curb its nuclear programme in return for limited sanctions easing.
The agreement appeared to face its first major difficulty on Friday with Russia warning that expanding a US sanctions blacklist could seriously complicate the deal's implementation.