The Ministry of Defence (MOD) has settled an outstanding £400m debt owed by the UK to the regime in Tehran.
It comes as British-Iranian Nazanin Zaghari-Ratcliffe's six-year ordeal in Iran is over after she was released from detention and flown out of the country.
Defence Secretary Ben Wallace confirmed the release of funds totalling £393.8m, owed by the MOD-owned company International Military Services Limited.
The debts were the result of unfulfilled contracts – a cancelled order of Chieftain tanks – signed between the company and the government in Tehran before the country's revolution in 1979.
Despite pre-payments, Britain still owed a debt, confirmed by the UK courts and International Court of Arbitration.
According to a statement made by Mr Wallace, the British government will work to ensure the repaid funds can only be used in line with "sanctions, and domestic counterterrorism and anti-money laundering legislation, for example to purchase humanitarian goods."