Iranian television has broadcast statements by detained British sailors apparently admitting entering Iranian territorial waters illegally.
Iranian TV has shown footage of detainees
Two of the eight sailors being held said they crossed the border from Iraq by accident, according to an Arabic translation played over their words.
An Iranian military spokesman said the sailors' fate had not been decided.
There have been a series of conflicting reports about whether the men will be put on trial or freed.
But the BBC's Tehran correspondent, Jim Muir, says there are now indications that the Iranian authorities will release the men.
An adviser to President Mohammad Khatami has said they could be freed if there is an official apology from the UK government.
THE SHATT AL-ARAB
120 miles of tidal waterway
Formed by Tigris and Euphrates rivers
Subject to 1639 Persian-Ottoman treaty
Southern stretch forms border between Iraq and Iran
River is vital trade route for both countries
Control of river one of disputes causing Iran-Iraq war in 1980
Earlier an Iranian armed forces spokesman, Gen Ali Reza Afshar, said the sailors' fate would only be decided after their interrogation, which was under way.
The Iranian student news agency, ISNA, quoted Gen Afshar as saying the men would be freed if their motives were found to be innocent, Reuters reported.
UK foreign ministry sources described the latest official statements from Iran as "pretty encouraging".
The three UK naval craft and their crews were seized on Monday in the Shatt al-Arab waterway near the Iraqi border.
A UK Ministry of Defence spokesman said the boats were being used to train the Iraqi river patrol service, and may have strayed across the maritime border by mistake.
The UK embassy in Tehran is pressing for access to the eight men, and has expressed concern that they were shown on television wearing blindfolds, making apologies for entering Iranian territorial waters.
Iran's Arabic-language al-Alam satellite channel showed footage of the eight men, dressed in military fatigues, sitting on sofas and armchairs in what appeared to be an office.
Al-Alam broadcast footage of the two men reading statements, standing next to a river.
"My name is Thomas Hawkins from the British Royal Navy, number D04428," said the first officer.
"I was arrested yesterday [Monday] by the Iranian Revolutionary Guards after we entered Iranian territorial waters," he said, according to the Arabic voice-over.
"Our team of three boats and eight crew entered Iranian waters by mistake. We apologise because this was a big mistake," he said.
The second officer, who introduced himself as "Chief Petty Officer Robert Webster", said the group had "accidentally entered Iranian waters".
Our correspondent says that in the context of Iran's calls for an apology, the fact that two of the Britons were filmed admitting they had made a mistake, could be seen as a hopeful sign rather than an ominous one.
He says Iran is a country of multiple power centres, which is why there is confusion over what is going to happen to the eight men.
He says it is likely that behind the scenes there are dissenting hardline voices who want at least to spin the affair out and demonstrate Iranian resolve and sovereignty to the British.
The incident comes at a time of strained relations between the UK and Iran.
Iranian hardliners have staged a series of angry demonstrations outside the British embassy in Tehran in recent weeks to protest at the occupation of Iraq.
Britain has also been strongly criticised too for its role in helping draft a tough resolution on Iran at the International Atomic Energy Agency in Vienna last week.