Iraq's foreign minister has urged his Iranian counterpart to free 15 Royal Navy personnel captured four days ago.
The 15 are based on HMS Cornwall, which patrols Iraqi territorial waters
Iran says they could be charged with illegally entering Iranian waters.
But in a telephone call on Sunday night Iraqi foreign minister Hoshiyar Zebari told Iran's Manoshahr Mutakki that the Britons were in Iraqi waters.
Tony Blair said that Britain is "utterly confident" that the naval personnel were in Iraqi waters and he repeated his call for their release.
The Iraqi foreign minister said is a statement that "according to the information available to the Iraqi authorities those soldiers were detained inside Iraqi waters".
The statement says: "They were working with the multi-national forces with the approval of the Iraqi government and according to UN Security Council resolutions.
"The minister called for the release of the detainees and to deal with this case in a wise way."
The Foreign Office said it is continuing to press for access to the group, and information on them.
On Sunday the UK ambassador to Iran, Geoffrey Adams, met officials in Tehran but failed to find out where the eight sailors and seven marines were being held or to gain consular access.
Three years ago, eight British servicemen were detained by Iran after a similar confrontation.
Former Marine Scott Fallon was one of those captured.
He told BBC Radio Five Live he was subjected to mock executions and accused of spying.
"They just wanted to know our mission - why we were there, why we were in Iran.
"We had no answers to these questions. Our mission was in Iraq, where we were... I suppose the same thing will be going on with these guys.
"You don't know if they're trying maybe to pin something else onto you. In our case it was being accused of spies in Iran, which was all new to us".
'Unjustified and wrong'
In the current incident, the Britons, who include one woman, were seized at gunpoint after inspecting an Iraqi boat and returning to their two small boats to head back to HMS Cornwall.
Iran says they were trespassing in Iranian waters, which the UK denies - insisting they were in Iraqi territory on a routine patrol.
Prime Minister Tony Blair on Sunday said Iran's detention of the personnel was "unjustified and wrong".
Mr Mutakki, speaking from New York on Sunday, said the captured Britons were involved in "the illegal entrance into Iranian territorial waters and this issue is being considered legally".
Students belonging to the paramilitary Basij group, which is close to Iranian President Mahmoud Ahmadinejad, have called for the Britons to be put on trial.
'No deal hint'
BBC security correspondent Gordon Corera said that in a telephone call with Mrs Beckett, Mr Mottaki said consular access was not likely until the initial investigations had been concluded.
Our correspondent said the Iranians were not yet thought to have hinted at any kind of deal or exchange to secure the release of the British personnel.
Instead, arguments had continued to focus on the exact position of the boats and whose waters they were in.
Our correspondent said in part this could be because the personnel were taken by the Iranian Revolutionary Guards, and the Iranian government as a whole may not yet have developed a unified position on how to proceed.
Dr Ali Pahlavan, the executive editor of Iran News - the only independent paper in Tehran - told BBC Radio 4's Today programme the "ultra conservative" Revolutionary Guard believed that Britain and the US needed to be challenged.
"This could be part of the strategy to challenge British and American supremacy in this part of the world - which is troubling, because this could lead to confrontation and this could be a trigger and could lead to escalation".
US Secretary of State Condoleezza Rice has backed the British call for the personnel to be released, as has the EU.
The capture took place as the UN Security Council voted unanimously in favour of further sanctions against Iran for its refusal to suspend its nuclear enrichment programme.