Downing Street has insisted the Government is making no link between the drive to free jailed British mother Nazanin Zaghari-Ratcliffe and a long-running row with Iran over a multimillion-pound debt.
Reports suggest that settlement of the £400 million debt is part of a shopping list of demands made by Tehran before it will release Mrs Zaghari-Ratcliffe.
The Sun has reported that Foreign Secretary Boris Johnson and Chancellor Philip Hammond have authorised lawyers to settle the dispute.
Mrs Zaghari-Ratcliffe's husband Richard Ratcliffe said on Wednesday that he believed his wife was being used as a "bargaining chip" in a wider diplomatic dispute between London and Tehran, and said it was "important" for the UK to honour its legal obligations to Iran.
But Theresa May's official spokesman told a regular Westminster media briefing: "We don't see any link between these two issues."
The spokesman said he did not "recognise" suggestions that the Government was preparing to settle the debt as part of its efforts to secure the release of Mrs Zaghari-Ratcliffe, who has been sentenced to five years in jail on charges of spying and seeking the overthrow the Tehran regime.
Britain was ordered by an international court in The Hague to return the money paid in the 1970s by Iran's pre-revolutionary government for an order of Chieftain tanks which were never delivered to the new Islamic Republic.
The money is understood to be held by the High Court, but has not been cleared for payment.
Speaking about the row over the 38-year-old debt, Mr Ratcliffe said: "It is important that the UK honours its international legal obligations so that Iran can honour its legal obligations.
"They are separate things but it is good for the atmosphere if they are all solved."