Britain has taken a crucial step towards renewing diplomatic ties with Iran, with Foreign Secretary William Hague telling parliament that both Tehran and London will appoint non-resident charge d'affaires.

The step could eventually lead to the re-opening of embassies in each country.

The UK's relationship with Iran collapsed when protesters ransacked the British embassy in Tehran in 2011, leading to the closure of the diplomatic post. The Iranian embassy in London was also later shut down.

However, the recent arrival of new leadership in Tehran appears to have brought a change in Iran's diplomatic stance with the West.

"Both our countries will now appoint a non-resident charge d'affaires tasked with implementing the building of relations, including interim steps on the way towards [the] eventual reopening of both our embassies," Hague told MPs in the House of Commons.

Hinting that there will be immediate progress in improving British-Iranian relations in the near future, Hague said: "We are open to more direct contact."

The foreign secretary continued: "It is clear that the new president and ministers in Iran are presenting themselves and their country in a much more positive way than in the recent past. There is no doubt that the tone of the meetings with them is different. We must test the Iranian government's sincerity to the full, and it is important that our channels of communication are open for that."

Officials from both sides are engaged in talks over a range of issues - including a safe working atmosphere for the local staff and secure premises in Iran.

Nonetheless, speaking about Iran's contentious nuclear programme, Hague said Tehran should make "substantive changes" if the Western powers have to ease the sanctions.

"In the absence of substantial change to these policies, we will continue to maintain strong sanctions," Hague said.