The parliament introduced an emergency bill to be voted on Sunday that would see diplomatic relations downgraded to the more junior level of charge d'affaires if passed, the website reported.

Several lawmakers cried "Death to Britain" as the bill was adopted with 162 votes. Five deputies voted against.

The head of the parliamentary committee on foreign policy and national security, Alaeddin Boroujerdi, said he was seeking "to expel the British ambassador from the country."

Britain on Monday, in coordination with the United States and Canada, announced new sanctions on Iran over its nuclear programme, after a report by the UN atomic energy watchdog this month suggesting Tehran was researching nuclear weapons.

Britain, which hosts the world's biggest financial market in the City of London, said it was "ceasing all contact" between its financial system and that of Iran.

Britain and Canada have embassies in Tehran. The United States does not, having closed it after Islamic students took its diplomats hostage in 1979 following Iran's revolution.

Iran has said the new sanctions will prove ineffective. It insists its nuclear programme is exclusively for peaceful, civilian ends.

"We believe pressuring and sanctions cannot fundamentally solve the Iranian nuclear issue. On the contrary, they will complicate and exacerbate the issue and intensify confrontation," said foreign ministry spokesman Liu Weimin.

The United States, Britain and Canada said in coordinated announcements Monday they were slapping additional sanctions on Iran targeting its financial and energy sectors, citing evidence that Tehran is pursuing nuclear weapons.

The evidence was outlined in a November 8 report by the United Nations' International Atomic Energy Agency.

Iran, however, has consistently denied it is seeking nuclear weapons, insisting its atomic programme is to produce electricity for civilian purposes.

Britain, home to the world's biggest financial market in the City of London, said Monday it was "ceasing all contact" between its financial system and that of Iran.

Canada announced new sanctions that target "virtually all transactions" including with Iran's central bank, and also imposed an embargo on the country's petrochemical, oil and gas industry.

The United States, meanwhile, announced fresh sanctions against Iran's energy sector and warned firms against dealing with the Islamic republic's financial sector, naming the country "a primary money laundering concern".

Liu on Wednesday called for further "dialogue and cooperation" between all parties involved "to properly settle the Iranian nuclear issue through negotiations".

China is a key ally of Iran. They have become major economic partners in recent years, thanks partly to the withdrawal of Western companies in line with sanctions against the Islamic republic.

Iran's other ally Russia -- which, along with China, blocked any possibility of the new sanctions being put to the UN Security Council for wider adoption -- has called the Western measures "unacceptable and against international law".