Whitehall said the Government’s position had not changed and that Iran had made the claim before without her being released.
Yesterday Foreign Secretary Dominic Raab said the debt “is not actually the thing that is holding us up at the moment”.
He said: “It’s the wider context as we come up to the Iranian presidential elections and the wider elections.”
He also described her treatment as “torture”.
The dispute dates back to the 1970s when the Shah of Iran paid the UK £400million for tanks. When he was toppled Britain refused to deliver them and kept the cash despite British courts accepting it should be repaid.
The anonymous Iranian official also said a deal had been made with the US for a prisoner swap in exchange for the release of £5billion of frozen funds. But Washington did not confirm it.
Labour MP Tulip Siddiq said the British ambassador to Iran visited Nazanin yesterday.