Protesters in the Iranian capital, Tehran, have broken into the UK embassy compound during a demonstration against sanctions imposed by Britain.
Militant students are reported to have ransacked offices, burned the British flag and smashed embassy windows.
The move comes after Iran resolved to reduce ties following the UK's decision to impose further sanctions on it.
Iran expressed "regret" over the attack on the embassy. The Foreign Office has summoned an Iranian diplomat in London.
UK Foreign Secretary William Hague said Britain held the Iranian government "responsible for its failure" to protect the embassy "as it is required to do".
Mr Hague said the Iranian charge d'affaires had been summoned, adding: "Clearly there will be other, further, and serious consequences. I will make a statement updating Parliament on this tomorrow."
Mr Hague said all embassy staff and their dependants had been accounted for.
