British Foreign Secretary Philip Hammond officially announced he would reopen the UK's embassy in Iran on Sunday, four years on since it was trashed by a mob, AFP reported on Saturday.
Iran's embassy in London will reopen at the same time, Hammond said, initially at charge d'affaires level, with a view to installing the two countries' respective ambassadors in the coming months.
European officials have been quick to visit Tehran since July 14, when Iran struck a deal with Britain, China, France, Germany, Russia and the United States, ending a 13-year stand-off over its nuclear program.
Over the past few weeks, officials from Italy, France, Germany and Serbia have visited Iran. After the deal was signed, EU foreign affairs chief Federica Mogherini announced that she would visit Iran as well.
Hammond's visit is the first by a British foreign secretary since 2003.
"Four years on from an attack on the British embassy, I am today re-opening it," Hammond said in a statement quoted by AFP.
"The Iranians will simultaneously re-open their embassy in London. Our relationship has improved since 2011."
That thaw began with the June 2013 election of Iranian President Hassan Rouhani, a reputed moderate who reached out to the West.
"President Rouhani's election and last month's nuclear agreement were important milestones. I believe that we have the potential to go much further," said Hammond.
The British Embassy in Iran was closed in 2011 after it was stormed by Iranian students who were protesting against Western sanctions over Iran's nuclear program.
Two years later, in 2012, Britain resumed its ties with Iran by naming a charge d’affaires, a diplomatic post that is one level below ambassador.
Following the 2011 embassy attack, Britain said it could not have happened without the tacit consent of the Iranian regime at the time.
But after the nuclear deal was signed, Hammond said he hoped Britain could reopen its embassy in Tehran this year, and Prime Minister David Cameron echoed that sentiment in a conversation with Rouhani.
"Reopening our embassies is a key step to improved bilateral relations," Hammond said Saturday.
"In the first instance, we will want to ensure that the nuclear agreement is a success, including by encouraging trade and investment once sanctions are lifted."
He said London and Tehran should also be ready to discuss challenges including terrorism, regional stability, and the spread of the Islamic State jihadist group in Syria and Iraq.
"This move does not mean that we agree on everything. But it is right that Britain and Iran should have a presence in each other's countries," Hammond added.
Hammond and treasury minister Damian Hinds are visiting Tehran with a small trade delegation for the two-day visit starting Sunday.
It includes the Institute of Directors, the British Bankers' Association, Shell Upstream International and the Confederation of British Industry, to discuss future trade opportunities following the historic nuclear agreement.
AFP contributed to this report.