Britain's Foreign Office has insisted it has seen "no evidence" to back up claims that Iran was directly involved in the kidnap of five Britons and the murder of four of them.
The BBC reported that former US commander in Iraq General David Petraeus was "90 per cent certain" that the hostages were held in Iran for at least part of the past two and a half years.
An unnamed member of Iran's Revolutionary Guard told The Guardian that the 2007 kidnapping in Baghdad was masterminded by the organisation and the men were taken within a day of their capture to prison camps run by its external wing, the al-Quds Brigade, within Iran.
But a Foreign Office spokesman said: "We have seen speculation that Iran is directly involved in this kidnapping. Iran of course has an influence in Iraq, but we have no evidence to substantiate claims of direct involvement in the kidnapping.
"We have no evidence that the British hostages, including Peter Moore, were held in Iran. We are not in a position to say with any certainty where they were held during each and every single day of their two and a half years in captivity."
Computer expert Mr Moore, 36, from Lincoln, has been freed and is believed to be preparing for his return to the UK at the British Embassy in Baghdad. The Foreign Office refused to say when he would fly home, saying that he wished to keep his return as low key as possible.
The bodies of three Britons who were working as his bodyguards - Alec MacLachlan, Jason Swindlehurst and Jason Creswell - were passed to UK authorities earlier this year, and Prime Minister Gordon Brown and Foreign Secretary David Miliband have demanded the return of the remains of fourth bodyguard Alan McMenemy, who they believe has also been killed.
Mr Brown spoke by phone to his Iraqi counterpart Nouri al-Maliki to thank him for his efforts in Mr Moore's release and express his gratitude to all those who secured his safe return.
The media reports will further heighten tension between the UK and Iran after Britain renewed its calls for human rights to be respected over the clampdown on protesters in Tehran and other cities.
Amid rising diplomatic tensions, Iran's foreign minister Manouchehr Mottaki said Britain would "receive a punch on the mouth" if it did not "stop its nonsense" and Iranian state television dismissed claims that Tehran was behind the kidnapping as "part of a psychological war against Iran".
PA