Britain has accused Iran of responsibility for explosions which have caused the deaths of all eight UK soldiers killed in Iraq this year.
There have been violent anti-British protests in Basra
A senior British official, briefing correspondents in London, blamed Iranian Revolutionary Guards.
He said they had provided technology to a Shia group in southern Iraq, although the Iranians had denied this, he added.
An Iranian spokesman denied the charge, insisted that Tehran was committed to ensuring a peaceful Iraq.
"From the very beginning, we have stated our position very clearly - a stable Iraq is in our interests and that is what the Iraqi authorities have said themselves on many occasions," Hamid Reza-Asefi told the BBC.
"Even in recent days, the Iraqi authorities have welcomed our position and our approach to Iraq."
While UK officials have hinted at an Iranian link before, this is the first specific allegation to be made.
They may feel there is little to lose right now by making such accusations, given that diplomatic relations are already low following the breakdown of talks over Iran's nuclear programme, says the BBC News Website's world affairs correspondent, Paul Reynolds.
The official, who spoke on condition of anonymity, said the technology had come from Hezbollah in Lebanon via Iran and produced an "explosively shaped projectile".
He said that dissidents from the Mehdi army, a militia controlled by the radical Shia cleric Moqtada Sadr, were suspected of carrying out the attacks.
One of their leaders, Ahmed al-Fartusi, was arrested by British forces recently and was "currently enjoying British hospitality", as the official put it.
It was that arrest which sparked off an anti-British protest in Basra recently.
Saddam trial postponed?
The official said that protests had been made to Iran and that the Iranian government had denied responsibility.
Asked about an Iranian motive, the official said that it could be that Iran felt that it had to show that it could not be "pushed around".
The official also said that the trial of Saddam Hussein, due to start on 19 October, might be postponed until after the elections in December.
Logistical arrangements for the trial, including a witness protection programme and even whether bullet proof glass was to be used around the dock, had still not been decided, he said.