Britain has promised to back US reprisals against Iran after an alleged plot to kill the Saudi ambassador in Washington was foiled.
Two Iranian nationals have been charged with offences including conspiracy to murder a foreign official amid allegations that Iranian government factions were behind the plot.
American officials claim the attempt was part of a wider planned bomb attack.
Manssor Arbabsiar, who is in custody in New York, and his alleged co-conspirator Gholam Shakuri, who is said to be in Iran, are believed to have been targeting a restaurant frequented by Saudi ambassador Adel al Jubeir.
Downing Street said Tehran should be "held accountable" after the alleged plot was uncovered by a US agent posing as part of a Mexican drugs cartel, who was enrolled by the suspects to help.
US attorney general Eric Holder told a news conference: "The criminal complaint unsealed today exposes a deadly plot directed by factions of the Iranian government to assassinate a foreign ambassador on US soil with explosives.
"Through the diligent and co-ordinated efforts of our law enforcement and intelligence agencies we were able to disrupt this plot before anyone was harmed."
Secretary of state Hillary Clinton said the US was preparing new penalties against Iran, including financial sanctions against individuals.
She said: "This really, in the minds of many diplomats and government officials, crosses a line that Iran needs to be held to account for."
A Downing Street spokesman said: "We congratulate the US authorities on the successful operation to disrupt a conspiracy to attack diplomats in the United States.
"Indications that this plot was directed by elements of the Iranian regime are shocking.
"Directing an attack against another country is a flagrant violation of international law which calls for the strongest condemnation."
Tehran has reportedly dismissed the claim of an assassination plot, with a spokesman for president Mahmoud Ahmadinejad calling it a "fabrication".
FBI director Robert Mueller said many lives could have been lost in what is alleged to be "the opening act" of an attack on US soil.
The US State Department has issued a worldwide travel alert for US citizens, warning that the planned assassination "may indicate a more aggressive focus by the Iranian government on terrorist activity against diplomats from certain countries".
This could include "possible attacks in the United States," it said in a statement on its website.
Saudi Arabia's embassy in Washington described the alleged plot as a "despicable violation" of international conventions.
Sky's foreign affairs editor Tim Marshall said sanctions against Iran in response "will not placate the hawks in America".
"Down the line, this could be used to make the case for justification (for military action)," he said.