William Hague has ordered the immediate closure of Iran's embassy in London and all diplomatic staff must leave the UK within 48 hours - a decision Tehran has reportedly branded "hasty".
It comes a day after protesters stormed the British mission in Iran's capital, damaging property and forcing staff to flee to safety.
The Foreign Secretary told the House of Commons the British Embassy has been closed and all staff have safely left the country.
Dozens of hardline students smashed windows, torched cars and burnt Union flags as they attacked the embassy and a second compound in the city on Tuesday.
Mr Hague said Tehran should be "ashamed" of the events that took place.
He added: "If any country makes it impossible for us to operate on their soil they cannot expect to have a functioning embassy here.
"This does not amount to the severing of diplomatic relations in their entirety.
"It is action that reduces our relations with Iran to the lowest level consistent with the maintenance of diplomatic relations."
Iranian state TV, quoting a government spokesman, said: "The foreign ministry spokesman...described the move as... hasty and added that naturally the government of the Islamic Republic of Iran would take further appropriate action regarding the issue."
About 24 embassy staff and their dependants were based at the British Embassy and residential compounds in Tehran.
British citizens have been advised against all but essential travel to Iran and those in need of help will be able to get consular assistance from other EU missions in Tehran.
World leaders were quick to condemn the actions of the demonstrators, and there was a strongly worded statement from the UN Security Council.
Prime Minister David Cameron called the attack "outrageous and indefensible".
He warned Iran's leaders of "serious consequences" following the breach of international law.
The United States, which cut off diplomatic ties to Iran after students stormed its own embassy in 1979, taking 52 Americans hostage for 444 days, also expressed alarm.
President Barack Obama said the storming of the embassy was "not acceptable" and that "all of us are deeply disturbed".
Tehran police chief General Hossein Sajadinia said several protesters had been arrested and would face the courts.
The break-in came amid protests against what the students described as London's "hostile policies" against Iran.
Iran's parliament voted on Sunday to reduce diplomatic relations with the UK following London's support for increased sanctions on Iran over its nuclear programme.
Britain last week decided to cut all relations with Iran's financial sector as part of the measures unveiled in co-ordination with the United States and Canada.
The West fears Iran is seeking to develop nuclear weapons but Tehran insists the programme is simply to meet its energy needs.
威廉.黑格已下令在倫敦的伊朗使館立即關閉,所有外交人員必須在48小時內離開英國 - 據報導,德黑蘭有品牌的“草率”的決定。
它的前一天後,示威者衝進了英國在伊朗的首都,破壞財產和強迫員工逃生的使命。
外相告訴眾議院下議院的英國大使館已經關閉,所有工作人員都安全離開該國。
數十名強硬派學生窗戶,放火焚燒汽車和燒毀聯盟標誌作為他們攻擊使館和週二在城市中的第二個化合物。
海牙先生說,德黑蘭應該發生的事件是“羞恥”。
他補充說:“如果任何國家不可能讓我們在其國土上,他們不能指望這裡有一個正常的大使館。
“這並不等於全部斷絕外交關係。
“這是採取行動減少與伊朗的關係與外交關係的維護一致來的最低水平。”
伊朗國家電視台援引政府發言人說:“形容外交部發言人 ... ...匆忙的舉動,並添加自然的伊朗伊斯蘭共和國政府將進一步採取適當的行動,有關的問題。”
約 24使館工作人員及其家屬在德黑蘭英國大使館和住宅區。
英國公民已被告知,反對一切必要的旅行對伊朗和那些需要幫助的人將能得到其他歐盟特派團在德黑蘭領事援助。
世界各國領導人迅速譴責示威者的行動,並有一個措辭強硬的聲明,聯合國安理會。
首相卡梅倫呼籲攻擊“離譜和站不住腳的”。
他警告說,伊朗領導人對下列違反國際法的“嚴重後果”。
美國,切斷對伊朗的外交關係後,學生衝進自己的大使館在1979年,到52名美國人扣為人質長達 444天,也表達了報警。
奧巴馬總統說,使館攻堅是“不能接受的”,“我們所有人都深感不安”。
德黑蘭警察總長侯賽因 Sajadinia說,若干示威者被逮捕,將面臨法庭。
突破之際對倫敦的“敵對政策”對伊朗學生抗議。
伊朗議會議員在週日以下倫敦的支持增加的制裁對伊朗在其核計劃,以減少與英國的外交關係。
英國上週決定,斷絕與伊朗的金融部門的協調與美國和加拿大推出的措施的一部分的所有關係。
的西方國家擔心伊朗正在尋求發展核武器,但德黑蘭堅持說,該計劃僅僅是為了滿足其能源需求。
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