Britain has ordered the immediate closure of the Iranian embassy in London and has closed its embassy in Tehran, following a mob attack Tuesday on British embassy compounds in the Iranian capital.
British Foreign Secretary William Hague announced the decision in parliament Wednesday.
He said Iran's diplomatic staff has been ordered to leave the United Kingdom within 48 hours.
"If any country makes it impossible for us to operate on their soil, they cannot expect to have a functioning embassy here," he said.
Hague added that Britain's response is not an indication it is severing ties with Iran. However, he said the action reduces relations with Iran to the "lowest level consistent with the maintenance of diplomatic relations."
On Tuesday, British Prime Minister David Cameron said Iran faced "serious consequences" for failing to defend the British compounds from protesters who smashed embassy windows and ransacked offices as police looked on.
The Iranian protesters had gathered in a reflection of government anger at British financial sanctions imposed on Iran last week.
Britain, the United States and Canada announced coordinated sanctions in response to Iran's pursuit of a nuclear program that U.N. experts say appears designed to build weapons. Iran says its nuclear program is peaceful.
Iranian parliament speaker Ali Larijani said Wednesday that Iranian police tried to maintain calm during the assaults in Tehran.
"This anger was the outpouring of several decades of exploitative actions by England in Iran," he said. "Part of it dated back to early periods of constitutional revolution (1905) and part of it was because of (UK's) role in strengthening the Pahlavid dynasty. After the revolution which caused England to lose its influence, they continued their animosity with the Iranian nation."
He also said the protests reflected ongoing Iranian discontent with Britain.
The attacks drew more international criticism Wednesday.
U.N. Secretary-General Ban Ki-moon's office said he expressed shock and outrage as he met with a British official during an aid conference in South Korea.
U.S. Secretary of State Hillary Clinton strongly condemned the embassy assault as an "affront not only to the British people but also to the international community."
China's foreign ministry said the assault was "contrary" to international law and norms and should be dealt with "appropriately." It was a rare Chinese criticism of Iran, a key supplier of energy to the Chinese economy.
Germany recalled its ambassador from Iran for consultations.
Norway has closed its diplomatic mission in Tehran following Tuesday's mob assaults on the British facilities.
Some information for this report was provided by Reuters.