Nazanin Zaghari-Ratcliffe's treatment "amounts to torture", foreign secretary Dominic Raab admitted on TV on Sunday.

Mr Raab also told the BBC's Andrew Marr show that it was "very difficult to argue" against the fact that the West Hampstead mum was being held as a hostage.

Nazanin-Zaghari-Ratcliffe-given-further-one-year-term-in-Ira

He added: “It is clear that she is subjected to a cat and mouse game that the Iranians, or certainly part of the Iranian system, engage with and they try and use her for leverage on the UK.”

Later on Sunday, unconfirmed reports emerged on Iranian state TV that the UK may be on the verge of agreeing to pay the £400m debt it owes Iran, which has been linked to Nazanin's case.

Nazanin's MP Tulip Siddiq said the Zaghari-Ratcliffe family had not heard any news, while the foreign office played down the reports.

Tulip tweeted: "I am aware there are news reports circulating about the debt being paid to #FreeNazanin. I have spoken to her family and they have heard nothing confirming any of these rumours.

"It was however welcome to hear Dominic Raab refer to her torture this morning on Marr. I hope the government is doing all it can to get the hostages home."

A Foreign Office spokesperson said: "We continue to explore options to resolve this 40-year-old case and will not comment further as legal discussions are ongoing.”

A British-Iranian dual-national, Nazanin was sentenced to a fresh jail term of one year on Monday, and handed a year-long travel ban in Iran on a new charge of “spreading propaganda against the regime”.

She has already served a five-year prison sentence after being detained on charges relating to national security in 2016.

The mother-of-one was arrested at Tehran airport as she made her way back to the UK after a visit to her parents to introduce them to her daughter.

She and her family believe she is being held as political leverage to try to force the UK’s hand in a long-running financial dispute between the UK and Iran.

It dates back to the 1970s when the then-shah of Iran paid the UK £400 million for 1,500 Chieftain tanks.

When the shah was toppled in 1979, Britain refused to deliver the tanks to the new Islamic Republic but kept the cash, despite British courts accepting it should be repaid.

Asked about the debt on Sunday, Mr Raab said: “It’s not solely about that. That is not actually the thing that’s holding us up at the moment, it’s the wider context as we come up to the Iranian presidential elections and the wider elections on the JCPOA (Joint Comprehensive Plan of Action) which, inevitably from the Iranian perspective, the two are considered in tandem.

“Nazanin is held unlawfully, in my view, as a matter of international law. I think she’s being treated in the most abusive, tortuous way. I think it amounts to torture, the way she’s being treated.”

Later in the day, hope was raised when state TV in Iran quoted an anonymous official who said deals had been reached with both Britain and the US in order to release prisoners with Western links held in Iran.

It was said the UK had agreed to pay the £400 million debt over the non-delivery of tanks dating back to the 1970s.

The US was said to have agreed a prisoner swap in exchange for the release of $7 billion (£5 billion) of frozen Iranian funds, but Washington did not immediately acknowledge any deal.

Additional reporting by PA Media.