Iranian state television has broadcast an interview with captured British sailor Faye Turney and footage of the 14 servicemen seized with her.
Leading Seaman Turney, 26, said they had been seized in the Gulf because "obviously we trespassed" in Iranian waters - something the UK disputes.
She said her captors had been friendly and the 15 personnel were unharmed.
Foreign Secretary Margaret Beckett said in a statement she was "very concerned" about the pictures.
Earlier Iran said it would release Leading Seaman Turney "very soon".
Iranian Foreign Minister Manouchehr Mottaki said she would be released on Wednesday or Thursday.
UK VERSION OF EVENTS
1 Crew boards merchant ship 1.7NM inside Iraqi waters
2 HMS Cornwall was south-east of this, and inside Iraqi waters
3 Iran tells UK that merchant ship was at a different point, still within Iraqi waters
4 After UK points this out, Iran provides alternative position, now within Iranian waters
The circumstances of the filming are unknown.
The footage showed the eight Royal Navy sailors and seven Royal Marines, who were seized at gunpoint by Iranian Revolutionary Guards last Friday, in their uniforms sitting and eating a meal out of white trays.
There was separate footage of Leading Seaman Turney - wearing a black headscarf - smoking and speaking.
She said: "I was arrested on Friday March 23. Obviously we trespassed into their waters.
"They were very friendly and very hospitable, very thoughtful, good people.
"They explained to us why we had been arrested. There was no aggression, no hurt, no harm. They were very, very compassionate."
The video showed a letter, said to have been written by Leading Seaman Turney, who is from Shrewsbury, to her parents, in which she admitted that the navy personnel had "apparently" crossed into Iranian waters.
The captured personnel were shown eating in their uniforms
"I wish we hadn't because then I would be home with you right now," the letter said.
BBC security correspondent Frank Gardner said he thought Leading Seaman Turney's words had been scripted.
"She did not sound there like somebody who was saying those words of her free will," he said.
"Obviously she had been told what to say."
Mrs Beckett said she was concerned about "any indication of pressure on or coercion of our personnel" who she said were on a routine operation in accordance with international law.
She added: "I am particularly disappointed that a private letter has been used in a way which can only add to the distress of the families."
Defence Secretary Des Browne said it was "completely unacceptable to parade our people in this way".
Earlier on Wednesday the UK said it was suspending bilateral contacts with Iran amid the dispute over the personnel.
They were taken after searching a merchant vessel in the northern Gulf.
Footage was shown of the British personnel being seized
Iran has insisted the group, based on HMS Cornwall, which has its home port in Plymouth, were in its waters when they were taken.
Earlier Prime Minister Tony Blair said it was time for the UK to "ratchet up" pressure on Iran.
The Ministry of Defence issued data it said proved the navy group had been 1.7 nautical miles inside Iraqi waters when they were seized.
Deputy Chief of the Defence Staff, Vice Admiral Charles Style, gave detailed co-ordinates which he said proved that.
The co-ordinates were 29 degrees 50.36 minutes north, 048 degrees 43.08 minutes east.
The MoD also released a photograph of a handheld global positioning satellite device in HMS Cornwall's Lynx helicopter as it flew over the searched merchant vessel.
Vice Admiral Style said the sailors had been "ambushed" and their detention was "unjustified and wrong".
The UK government said the Iranians had initially said the merchant vessel had been at a point within Iraqi waters, before later providing a second, alternative position, within Iranian waters.
Iran's embassy in London issued a statement in response to the UK data, in which it said the sailors and marines had been 0.5 km inside Iranian waters at the time they were seized.
The statement, quoted by the official IRNA news agency, said "the governments of Iran and Britain have the ability to solve the incident through contacts and close co-operation".