"This morning, three British boats with eight people on board entered Iranian territorial waters. The Iranian navy, in accordance with their duties, seized these boats and arrested the crew," spokesman Hamid Reza Asefi said in a statement.

"Currently they are being interrogated and an investigation is underway," he added. Official sources said the small patrol boats were armed with heavy machine-guns, and identified the detained Britons as "Royal Navy commandos".

A British military spokesman in Iraq said: "We can confirm three small Royal Navy patrol boats and eight crew have been out of communication since the early hours of this morning.

"Their last known indication was to be in the Shatt al-Arab area which is not unusual. There are no further details at present."

Iranian state television's Arabic-language channel, Al-Alam, said Iranian forces had also seized GPS devices, assault rifles, pistols, cameras and detailed maps of the Iran-Iraq border area.

The British soldiers were detained shortly before midday and had "confessed that they had made a mistake", Al-Alam said, adding it would show television footage of the British detainees later the same day.

Playing it down as a "low-level incident", a Royal Navy spokesman at the defence ministry in London said the three small boats appeared to have "strayed into Iranian territory".

"These boats are used for training Iraqi river patrol service ... what we would call river police," said the spokesman, who was unable to specify if any Iraqis were on board.

"The waterway runs over a mile (1.6 kilometres) wide. The border runs pretty much down the middle of it ... Maybe, it was disputed whose side" of the border the vessels were on, he said.

British armed forces control a large area of southern Iraq around the city of Basra, and along with Iraqi security forces patrol parts of the Shatt al-Arab, mostly to combat smugglers and anti-coalition militants seeking to infiltrate Iraq.

Contacts with Iranian troops along that border area have generally been described by British sources as "cordial", and Monday's incident is the most serious in the sensitive area since last year's US-led invasion of Iraq.

The Shatt al-Arab border demarcation was a constant source of dispute -- and of conflict during the 1980-1988 war between Iran and Iraq -- under Saddam Hussein, until a deal was struck for the frontier to run at the mid-way point.

The British embassy in Tehran said it was in touch with Iranian officials.

Ties between Britain and Iran have been strained in recent months, with the embassy here being targeted by a string of angry demonstrations sparked by an Iraqi prisoner abuse scandal as well as the entry of coalition troops into Iraqi holy Shiite cities.

Britain was also the co-sponsor of a resolution passed by the International Atomic Energy Agency last Friday that heavily criticised Iran for failing to fully cooperate with an investigation into its suspect nuclear programme.

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WAR.WIRE