Parliament's watchdog foreign affairs committee said the deal to rein in Iran's ballistic missile programme -- known formally as the Joint Comprehensive Plan of Action (JCPOA) -- was now "a shell of an agreement" and "beyond repair".

"Despite good intentions, the JCPOA was an agreement built on weak foundations," committee chairman Tom Tugendhat said, noting its demise "seems to have been inevitable".

"The UK Government should work to broker a replacement to the JCPOA which also addresses regional security," he added.

"The voices of allies in the region and in Europe, and with the new US administration, need to come together to ensure a diplomatic option is available to those in Iran who are looking for a solution to decades of isolation."

The committee's report also urged the British government to respond more effectively to Tehran's "wider destabilising activities" in the region.

It recommended a range of measures including designating Iran's elite military force -- the Islamic Revolutionary Guard Corps (IRGC) -- a terrorist organisation, as the United States did last year.

The MPs said the IRGC's "clear and enduring support for terrorists and non-state actors working to undermine stability in the region" would permit the move under UK law.

- 'State hostage taking' -

"This is a logical extension of the existing restrictions placed on members of the IRGC by the EU's sanctions regime and would follow the US' decision to proscribe the IRGC as a Foreign Terrorist Organisation in 2019," the report said.

Meanwhile, the lawmakers also warned Tehran against arbitrarily detaining foreign and dual nationals, saying it amounted to "state hostage taking".

The UK's current approach to the issue is "clearly not working", they said, calling for improved support to those detained and their families.

Tensions between London and Tehran have been severely strained in recent years by the detention of several dual nationals, most prominently Nazanin Zaghari-Ratcliffe.

The British-Iranian woman, who worked for the Thomson Reuters Foundation -- the media organisation's philanthropic arm -- has been held in Tehran since 2016.

Iranian authorities convicted her of sedition -- a charge Zaghari-Ratcliffe has always contested -- and she is serving a five-year prison term.

"The UK Government must call the arbitrary detention of foreign nationals what it is: hostage taking," Tugendhat said.

"The charges, trials and convictions of British citizens on Iranian soil are a parody of a justice system.

"Using young mothers and retirees as bargaining chips and leverage is an unacceptable form of diplomacy," he said.