British calls for a mass walkout of European Union ambassadors from Tehran were shot down by more cautious nations led by Germany and Italy yesterday as the carefully constructed European consensus on responding to Iran came under intense strain.

Britain, backed by the outgoing Czech presidency of the EU, had pushed for the dramatic step of a temporary withdrawal of ambassadors to pile pressure on Tehran to free local British Embassy staff from custody.

With the release of all but two of the nine staff by yesterday afternoon, the incoming Swedish presidency of the EU, which took the reins on Wednesday, struck a less aggressive diplomatic note, more in tune with Berlin and a number of other EU capitals.

Carl Bildt, Sweden’s Foreign Minister, said last night that the EU had called on Iran to release all the British Embassy employees, but added that the EU was still awaiting a response from Tehran. Suggesting that it was too early to recall the ambassadors, Mr Bildt said: “We are taking this step by step.”

Speaking after the first day of a two-day meeting of EU foreign policy officials in Stockholm, Mr Bildt said that the ball was in Iran’s court and that tough action could still be taken, although the EU wanted good relations with Tehran so that it could negotiate with it over its nuclear ambitions.

It was a marked change in tone from the Czech EU presidency, which has issued two strongly worded statements since the disputed Iranian elections nearly two weeks ago. In one, it called the Iranian claims of EU interference “baseless and unacceptable”. Confirming a split among the EU powers, Cecilia Malmstrom, the Swedish Europe Minister, told The Times: “We are listening, there are different views.”

Angela Merkel, the German Chancellor, said that instead of the British plan, a “strong signal” should be sent to the Iranian regime by next week’s G8 summit in Italy. “I hope the meeting sends a strong message of unity, a united message that the right to demonstrate and human rights cannot be separated and that they apply to Iran,” Mrs Merkel said in a speech to the Bundestag.

“I strongly support President Obama’s offer to Iran of direct talks. We will accompany this in a united way. We cannot drop the issue of a nuclear-armed Iran just because of the current situation. That would be completely wrong.”

Her measured approach represented a rebuff to British calls for more immediate action. British diplomats put a brave face on the reversal by insisting that the rapidly changing and confusing situation over the detentions meant that it was better to take a wait-and-see approach rather than rush into action.

“There is a changing situation on the ground in Iran so it is right to have a gradual approach with a number of options on the table,” said one British diplomat, who added that the main focus had to be the release of the remaining embassy staff.

There was confusion over how many remained in custody after an Iranian statement said that all but one was released, while British diplomats said that two were still being held.

The behind-the-scenes dispute over the EU response came after an Iranian announcement on Wednesday that the EU had disqualified itself from talks over Tehran’s nuclear programme because of its “interference” in the post-election demonstrations.

The EU “has totally lost the competence and qualifications needed for holding any kind of talks with Iran”, Iran’s chief of staff, General Hasan Firouzabadi, was quoted as saying by the semi-official Fars News Agency.

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