Iran has arrested eight local British embassy staff, the Fars news agency has reported.

Mousavi supporters demonstrate earlier this month against disputed Iran elections

The move will further exacerbate strained ties with the West over the post-election turmoil in the Islamic republic.

Iran has accused of Britain of stoking the unrest that swept the country after a disputed election returned hardliner Mahmoud Ahmadinejad to power.

“Eight members of the local staff at the British embassy who had a considerable role in the recent riots have been arrested,” Fars reported.

Last week, Foreign Minister Manouchehr Mottaki warned that Iran may downgrade its ties with Britain after the two governments expelled diplomats in a tit-for-tat move.

Iran has also expelled the BBC’s correspondent in Tehran and arrested a British-Greek journalist, as well as a number of other British passport-holders it says were involved in rioting.

The latest backlash against the West comes as opposition leaders in Iran keep up their defiance of the regime, rejecting a panel set up to hold a partial recount of ballots cast in the June 12 vote.

Mir Hossein Mousavi, President Ahmadinejad’s strongest rival, is still insisting on a new vote.

Another defeated candidate, Mehdi Karroubi, has demanded an independent panel to investigate irregularities.

Facing its biggest threat since the revolution in 1979, the Islamic regime has sought to quell the disquiet over the election results by ordering a partial recount.

Iran’s electoral watchdog, the Guardians Council, said it will create a special committee of political figures and candidate representatives to recount 10% of the ballots.

According to official results, Mr Mousavi, who was prime minister in the post-revolution years, won just 34% of the vote against 63% for Mr Ahmadinejad, a gap of 11 million votes.

At least 17 people are believed to have been killed in clashes with security forces, since the elections.

It is virtually impossible to verify the reports because foreign media are banned from the streets under new restrictions imposed in the wake of the election.