By Paul Reynolds
World Affairs correspondent, BBC News website
Anti-British protester in Tehran
Britain and Iran appear to have toned down their confrontation over the 15 British naval personnel and to have entered a diplomatic phase.
Britain wants direct talks. Officials are frustrated that Iran has taken so long, perhaps because of its holiday and perhaps because of internal differences, to formulate a position.
But a senior British official, Sir Nigel Sheinwald, the prime minister's foreign affairs adviser, has now managed to contact a key Iranian figure, Dr Ali Larijani, who leads on the Iranian nuclear issue. Earlier, Mr Larijani had appeared on Channel 4 news in Britain, saying that there should be a diplomatic solution. The Channel 4 presenter Jon Snow says that Mr Larijani contacted them so it seems that he wanted to get a grip on the situation.
However, the British Foreign Secretary Margaret Beckett, briefing correspondents in London, cautioned against expecting a "swift resolution".
Exactly what Iran wants remains imprecise.
Britain has not even been formally asked for an apology in the diplomatic exchanges that have taken place. It is willing to discuss future maritime arrangements and even to send a delegation to Iran to discuss this.
And the Foreign Office in London says that the Iranians have not linked the prisoners to other events.
However there has been some mysterious scurrying in Iraq. An Iranian diplomat is being allowed to visit five Iranians held by US forces since January and an Iranian diplomat was suddenly released this week after being kidnapped nearly two months ago. Is this all coincidence or is it linkage?
A diplomatic channel is being opened up, but it is not yet a clear channel.
The latest views of President Mahmoud Ahmadinejad are awaited.
The atmosphere has certainly improved. New pictures of the prisoners show them smiling and playing chess. This is a great contrast to the aggressive pictures of the US embassy hostages in 1979, who were blindfolded.
Iran is saying that the British position has shifted. The Foreign Secretary Mrs Margaret Beckett has spoken of her "regret" at the dispute.
And Iran has softened, saying that it will not broadcast "admissions" made by all 15 in the naval party.
Film of the prisoners, but without sound, were shown on Monday and the commentary said: "It seems that Britain has shifted a little bit
from its stance in the last one or two days over the undeniable
facts and from some of its clamour.
"If this path continues, one can hope that the issue would
be resolved in a bilateral process and far away from fuss and
clamour and with achieving Iran's logical demands."
The president's role
The Iranian president was in his usual rhetorical form on Sunday - the anniversary of the founding of the Islamic Republic 28 years ago. He was quoted by the Iranian news agency Irna as saying that "arrogant powers will vanish like bubbles on water".
This is a crisis right up his street. Britain is still regarded with great suspicion in Iran, having in 1953 joined the US in overthrowing Prime Minister Mohammed Mossadegh in favour of the Shah. Iran has also been calling for Britain and the US to leave Iraq and has been accused in turn of helping Shia militias to attack coalition forces. So the background is one of suspicion.
President Ahmadinejad cut his revolutionary teeth when the US embassy hostages were seized and held in 1979, so has experience of how his kind of politics can thrive in confrontation with an outside power.