The army have been fighting northern rebels since 2004
A boat carrying Iranian weapons destined for Yemeni rebels has been intercepted in the Red Sea, local Yemeni officials have said.
The Iranian crew and a cargo of mostly anti-tank shells were seized near Midi an official told the AFP news agency.
Iranian state television quoted "informed sources" denying the story.
The Yemeni central government has not commented but officials have long accused the rebels of receiving Iranian support, a claim Tehran denies.
Iranian state broadcaster al-Alam TV called the incident a "fabrication of the media".
Last week Yemeni President Ali Abdullah Saleh alleged that captured rebels had confessed their funding came from Iranian dignitaries.
But he said he did not accuse the Iranian regime itself.
The AFP new agency quoted a local Yemeni official saying that from preliminary enquiries, five of the Iranians captured on Monday were "instructors" who had planned to deliver weapons and then evacuate wounded Iranians.
The rebels, known as Houthis, say they want greater autonomy and an public role for their version of Shia Islam. They complain their community is discriminated against.
They accuse Saudi Arabia of supporting Sanaa and last week said they had clashed with Saudi forces along the border between the two countries.
Yemeni officials accuse Houthis, who are the majority in the north of Yemen, of wanting to re-establish Shia clerical rule.
On Tuesday a court in Sanaa sentenced four Houthi rebels to death in the third trial of men captured during clashes with government troops north of the capital in 2008. Twelve others have been sentenced to death in earlier trials relating to the fighting.
Houthi rebels first took up arms against the government in 2004.
The government launched a fresh offensive in August 2009 which has precipitated a new wave of intense fighting.
Aid agencies say tens of thousands of people have been displaced.