As relatives and friends popped champagne corks in Britain, the naval personnel were seen on state television chatting with Iranian President Mahmoud Ahmadinejad after his surprise announcement of their release.

"Although Iran has the right to prosecute them by following the model of the prophet the 15 people were pardoned and their freedom given as a gift to the British people," Ahmadinejad said at a Tehran press conference.

The announcement was welcomed by Britain and governments across the world as well as joyous relatives of the captives, some of whom had been paraded on state television "confessing" to trespassing in Iranian waters.

An Ahmadinejad aide said the 14 men and one woman were currently at the foreign ministry and would be handed over to the British embassy on Thursday and then fly out of Tehran.

Another official, speaking on condition of anonymity, was quoted by state news agency IRNA as saying they would fly out of Tehran at 8:00 am (0430 GMT).

The eight sailors and seven marines, all in their 20s, were seized at gunpoint while patrolling the northern Gulf between Iran and Iraq on March 23.

British Prime Minister Tony Blair hailed their release and thanked "our friends and allies in the region who played their part" amid unconfirmed reports that Syria and Qatar had helped bring about a peaceful resolution.

He said Britain, which took the issue to the UN Security Council last week, had taken a "firm but calm" approach, "not negotiating but not confronting either".

The families of the detainees erupted in joy and relief at the news, which came after 13 days of a sometimes heated propaganda war.

"We've been absolutely devastated these last 13 days, it's been the longest of my life. I'm just so happy today," said April Rawsthorne, grandmother of 21-year-old Nathan Summers, clutching a bottle of champagne.

Iranian state media said the 15 had "shouted for joy" on news of their release.

"We are grateful for your forgiveness," one sailor was heard telling Ahmadinejad, who in turn wished them good luck. The men were wearing suits while the sole woman captive, Faye Turney, was in trousers and a headscarf.

The standoff had further damaged ties between Tehran and the West already frayed by Iran's controversial nuclear programme, and had sent jitters through world oil and financial markets.

Oil prices had surged to near seven month highs on fears Iran could disrupt supplies and fell on news of the release.

However, Iran's hardline president -- who saved his dramatic announcement until nearly the end of the press conference -- still lashed out at Britain over its handling of the crisis and decorated a Revolutionary Guards officer who commanded the operation in which the Britons were seized.

"The British government, in a letter, has vowed not to repeat such incidents. But this release is not linked to this letter. It is due to Islamic goodwill," he said.

His announcement came after Iran had applauded a "change of tone" from Britain following talks between top security official Ali Larijani and Blair's chief foreign policy advisor Sir Nigel Sheinwald on Tuesday.

Syria -- Iran's top ally in the region -- had announced it was mediating in the crisis after a call from Sheinwald.

Iran had insisted the key to resolving the crisis was an admission from Britain that the sailors and marines violated its territorial waters.

Britain maintains the group was carrying out routine anti-smuggling operations in Iraqi waters in line with a UN mandate, but Iran says the sailors' Global Positioning System (GPS) devices show they intruded on Iranian waters.

Wednesday's development followed the release in Baghdad of an Iranian diplomat kidnapped in Iraq in February in an abduction Tehran had blamed on US forces.

Iranian state media also said five Iranian officials captured by US forces in northern Iraq in January accused of stoking unrest were expected to receive their first visit by an Iranian diplomat.

US President George W. Bush welcomed the release of the Britons but Washington denied any link to the sudden granting of consular access to the five Iranians held in Iraq.

The crisis had come at a perilous time for Iran's relations with the West, with the United States refusing to rule out military action over its nuclear drive and the United Nations imposing tough new sanctions.

Ahmadinejad repeated that Iran was ready to negotiate with the United States but only if Washington changes its stance.

"Today we have no objection to relations but this requires US action," he said.

The United States has said it will talk to Iran but only if the Islamic republic suspends uranium enrichment -- a process at the centre of Western fears Tehran may be trying to build an atomic bomb.

Despite tougher UN sanctions, Iran has vehemently refused to freeze enrichment and says is nuclear work is for peaceful purposes.

In June 2004, Iranian forces seized eight British servicemen in a similar area of the Gulf and released them three days later.

earlier related report
Blair Hails Release Of Iran Detainees Says No Negotiations
by Katherine Haddon
London (AFP) April 4 - British Prime Minister Tony Blair welcomed Iran's surprise announcement Wednesday that it was releasing 15 captured sailors, saying there had been no negotiations to secure their freedom.

At the same time Blair paid tribute to "our friends and allies in the region who played their part" amid unconfirmed reports that Syria and Qatar had helped to bring about a peaceful resolution.

The British leader, who last week took the case to the UN Security Council, said Britain had taken a "firm but calm" approach, "not negotiating but not confronting either."

"To the Iranian people I would simply say this: we bear you no ill will ... And the disagreements that we have with your government we wish to resolve peacefully through dialogue," he said in a statement outside his office at 10 Downing Street.

Iran, which remains at odds with the West over its plans to develop nuclear power, has said that the sailors will fly out of the country Thursday after the two-week-long crisis.

Defence Secretary Des Browne said: "It is vital that we get them back home quickly and safely so they can be reunited with their families and loved ones."

Asked whether any conditions had been attached to the release, and about Ahmadinejad's claim that Britain had promised no repeat of such incidents in a letter, a Downing Street spokesman declined to comment.

Families of the released sailors and marines could not contain their excitement at the news. "It's the best Easter present for us all," Ray Cooper, uncle of Adam Sperry, one of the detainees, told BBC television.

"It's just all ended up brilliant."

The family of another of the detainees, 24-year-old Mark Banks, said they were planning a party for his return.

The eight sailors and seven marines were captured on March 23. Britain insisted they were in Iraqi territorial waters, while Tehran said they were in Iranian waters.

Britain pursued quiet diplomacy for the first few days, but after Foreign Secretary Margaret Beckett hit a dead end in talks with her Iraqi counterpart Manouchehr Mottaki on March 27, London's patience snapped.

London gave a military briefing on its version of events the following day and Blair vowed to ratchet up the pressure on Tehran.

Hints of a resolution started emerging only as late as Tuesday.

Blair said then that the coming 48 hours would be crucial in efforts to ensure the sailors' release, while Iran's top security official Ali Larijani said there would be no need to try the group in court.

Later that day, Larijani held talks with Blair's chief foreign policy advisor Sir Nigel Sheinwald. That yielded a statement from Downing Street saying both sides favoured an "early resolution".

But Ahmadinejad's announcement of the group's release at a press conference Wednesday took even the most seasoned observers by surprise.

William Hague, foreign affairs spokesman for Britain's main opposition Conservative Party, welcomed the news.

"I'm sure their families and the whole country are greatly relieved and we look forward to welcoming them home quickly and safely," he said.

Former British foreign secretary Lord David Owen, who held office from 1977-79, told Sky News the release could be a sign Iran wanted to "turn over a new leaf".

He hoped that Ahmadinejad would now improve relations with Britain and the United States and help stabilise Iraq.

"He's a hardliner. We shouldn't delude ourselves. But it's a good step," he added.

But Mehdi Varzi, an Iranian ex-diplomat, cautioned that Iran still felt under siege from the West.

"Iran wants to be recognised and seen as an actor in the area and not ignored," he said.

"The message is that the Iran leadership has felt at the receiving end of the world in the last few years."

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