Fifteen Royal Navy personnel based on HMS Cornwall were seized by Iranian Revolutionary Guards on 23 March in the northern Gulf.
Here are the key developments in the incident.
Iranian president Mahmoud Ahmadinejad says the Royal Navy personnel will be freed as a "gift" to the UK.
At the same news conference he awarded medals to the commanders who captured the crew.
Tony Blair says the next two days will be a "critical" phase in talks with Iran, raising hopes of a possible breakthrough.
But Foreign Secretary Margaret Beckett warns against expecting a "swift solution".
Later, Downing Street confirms further contact has been made with Tehran and directly with national security chief Ali Larijani.
Officials say Tony Blair believes both sides share a desire to achieve an early resolution through direct talks.
Meanwhile, Iranian Vice President Parviz Davoudi calls on Britain to admit its sailors made a mistake.
He says the issue will then "obviously become negotiable and can be resolved through a rational process".
New photographs of the crew in casual clothes are also released.
Ali Larijani, of Iran's Supreme National Security Council, tells Channel 4 News he wants a diplomatic solution to the crisis. The UK says it is studying his comments, but "shares" that desire.
The most recent images of the crew were aired without sound
Tony Blair's spokesman says there is "a lot going on behind the scenes".
Previously unseen images of some of the crew are later aired but their voices cannot be heard.
Iran's ISNA news agency reports footage of all personnel "explaining details about their arrest in Iranian waters" will not be broadcast on TV because of "positive changes" in the UK's stance.
Iranian state radio says the 15 captured Britons accept they were picked up in Iranian waters.
Iranian state television airs new footage of two of the Royal Navy personnel who were captured.
Two of the captives were shown in front of a chart of the northern Gulf
They are shown separately standing in front of a chart of the northern Gulf where the sailors and marines were seized.
The Foreign Office describes showing the TV footage as "unacceptable".
Iranian students throw firecrackers and rocks into the British embassy compound in Tehran.
Defence Secretary Des Browne says both countries are in direct bilateral contact.
Iranian Foreign Minister Manouchehr Mottaki says his country is waiting for a "change in attitude" from the UK and a "moderate approach".
US officials rule out a deal to exchange the Royal Navy personnel captured in the Gulf for five Iranians seized by American forces in Iraq.
Foreign Secretary Margaret Beckett says she has replied to a letter from the Iranian government.
In a speech, Iranian President Mahmoud Ahmadinejad criticises Britain's response to the crisis, describing the UK as "arrogant" for failing to apologise.
US President George W Bush criticises Iran's seizure of the Royal Navy personnel.
Iranian TV broadcasts an interview with a second crewman, Nathan Summers, who apologises for "trespassing" in Iranian waters.
Tony Blair says "parading" members of the crew in this way would only "enhance people's sense of disgust with Iran".
Nathan Summers was the second crew member to be interviewed
Iran releases a third letter allegedly from Leading Seaman Faye Turney in which she said she had been "sacrificed" to the policies of the UK and US governments.
It emerges a formal note has been passed from the Iranians to the British embassy in Tehran.
The note condemns the navy's "illegal act" and demands guarantees against "recurrence".
European Union foreign ministers call for "the immediate and unconditional release" of the sailors.
The UN Security Council agrees a watered-down statement voicing "grave concern" at the capture of the personnel, and calling on Tehran to allow the UK consular access. The UK had wanted the statement to "deplore" Iran's actions and call for their immediate release.
Iran releases video footage which it says shows the British crew being seized in Iranian waters. Alongside is a military briefing showing charts which pinpoint their supposed location.
Any moves to release Leading Seaman Faye Turney are frozen - Iran blames the UK's "incorrect attitude".
A second letter apparently written by LS Turney is released which calls on the UK to withdraw troops from Iraq. Downing Street calls her treatment "cruel and callous".
Iranian state television broadcasts an interview with Faye Turney and footage of the servicemen. They had "obviously" trespassed but their captors had been friendly, she says.
The UK says GPS data shows the personnel were in Iraqi waters
Iranian Foreign Minister Manouchehr Mottaki says Ms Turney will be released within two days.
Tony Blair tells the Commons it is time to "ratchet up" pressure on Iran, with whom the UK suspends bilateral contacts.
The Royal Navy presents GPS evidence it says proves the group were 1.7 nautical miles inside Iraqi waters when they were seized.
UK Foreign Secretary Margaret Beckett calls for the group's "speedy return" as she speaks to her Iranian counterpart for a second time.
Prime Minister Tony Blair's official spokesman says the UK could release evidence to prove the group was in Iraqi waters.
Tony Blair talks of a "different phase" in diplomatic efforts if current moves fail. The 15 were in Iraqi waters under a UN mandate, he adds.
The BBC is told the group are being held in Tehran, where Iran says they are being treated humanely.
Iran says the 15 are being questioned but were not taken in exchange for Iranians held by the US in Iraq.
The UK holds a third meeting with Iran's ambassador. In Tehran, the British ambassador is assured the missing personnel are "fit and well".
Iraq's minister of foreign affairs tells Iran the British personnel were in Iraqi waters.
The only woman among the group is named as Faye Turney, 26. Her family say it is a "very distressing time".
Hardliners around Iran's president demand the 15 go on trial.
In a phone conversation with her Iranian counterpart, Margaret Beckett says it is "very clear" no violation occurred.
In his first remarks on the incident, Tony Blair says it is "serious" and calls for a swift end to the "unjustified and wrong" detention.
The UK says it has not been told where the 15 personnel are being held. British ambassador Geoffrey Adams presses for consular access.
An Iranian forces spokesman says the group is in good health.
A Tehran news agency says the group admits sailing into Iran waters and GPS systems on the UK boats prove this.
Foreign Office minister Lord Triesman meets the Iranian ambassador in London to demand the group's immediate release.
Fifteen Royal Navy sailors and Marines from HMS Cornwall are seized by Iranian warships after searching a cargo boat in the Gulf.
The 15 are based on HMS Cornwall, which patrols Iraqi territorial waters
Iranian state television reports the Britons are being held after entering Iranian waters, but the UK insists the group were within Iraqi boundaries.
Iran's ambassador in London, Rasoul Movahedian, meets UK Foreign Office permanent secretary Sir Peter Ricketts. In Tehran, UK diplomats are summoned for talks.