Iranian state television has broadcast a video of some of the 15 British Navy personnel captured by Iran last week, including the only female captive.
Britain called the video "completely unacceptable."
The female captive, Faye Turney, was shown saying the group had "obviously trespassed" into Iranian waters, and that the Iranians were "very friendly" and "very hospitable."
The video also showed a letter purportedly written by Turney in which she apologized to the Iranians for entering their waters.
Iranian Foreign Minster Manouchehr Mottaki said Turney could soon be freed.
British Foreign Secretary Margaret Beckett voiced concern that the statement could have been made under coercion. Britain says global positioning satellite data proves the Britons were in Iraqi waters when captured.
Beckett also said Wednesday that Britain has frozen "official bilateral business" with Iran, except efforts to gain release of the 15 British naval personnel.
British Prime Minister Tony Blair says Iran's seizure of the group was unacceptable and illegal. He and President Bush discussed the incident Wednesday in a videoconference.
The White House said Mr. Bush fully backs Mr. Blair.
Britain says the naval personnel were conducting a routine inspection of a merchant ship in the Shatt al-Arab waterway between Iran and Iraq when they were seized last Friday.