Britain's foreign secretary Dominic Raab said reports of the imminent release of Nazanin Ratcliffe-Zaghari were "not yet accurate", as he called on Iran to unconditionally release political prisoners being held in the country.
Mr Raab made the comments following a face-to-face meeting with US Secretary of State Antony Blinken in London on Monday.
He said the British government was working "intensively" to free detainees but denied reports in Iranian media that the release was of Ms Ratcliffe-Zaghari was imminent.
"I would say that it's incumbent on Iran unconditionally to release those who are held arbitrarily and, in our view unlawfully," Mr Raab said.
"The reports, I'm afraid, are not yet accurate in terms of the suggestion of her imminent release."
Mr Blinken reiterated calls for the release of British and American prisoners being detained in Iran for political purposes.
"I would hope that with time and effort, countries could establish a norm that this practice is simply unacceptable.
"Countries that are engaged in these actions need to know that this cannot happen with impunity, and it is truly unacceptable."
The pair also discussed a range of topics during their discussions, including how to tackle the Covid pandemic recovery and tensions with China and Russia.
Foreign ministers from the G7 are meeting in London to plan rebuilding the global economy devastated by Covid-19.
Earlier on Monday, it was reported that G7 countries are to commit $15 billion to help girls’ education and boost women’s employment to “transform the fortunes” of communities and nations.
Britain, which holds the G7 presidency this year, said the commitment would put gender equality "at the heart of global co-operation to build back better from Covid-19".
The announcement comes as ministers will this week discuss a number of issues, from trade to foreign policy and sustainable development.
Announcing the $15bn fund to be spent over the next two years, Mr Raab said ensuring girls receive 12 years of education and getting more women into work were among "the smartest investments we can make to change the world".
The foreign ministers will this week sign up to global targets to get 40 million more girls into school and 20 million more girls reading by the age of 10 by 2026.
Women have been disproportionately affected by the pandemic, losing school time and suffering reduced access to medical services, a surge in gender-based violence and an increased risk of losing their job.
The G7 statement said that by making smart investments “we can lift people out of poverty, grow economies and save lives”.
Research showed that a child whose mother is literate was 50 per cent more likely to live beyond 5 years of age, twice as likely to attend school and 50 per cent more likely to be immunised.
Despite a controversial £4bn ($5.55bn) cut to Britain's overseas aid budget, Mr Raab said the UK was helping the females across the world.
“The UK is putting girls’ and women’s rights at the heart of our G7 presidency, uniting countries that share our values so we shape a better path ahead,” he said.
Even before the pandemic, women had significantly fewer economic opportunities than men and shouldered the majority of unpaid care work, reducing their time available to earn cash, the Foreign Office statement said.
“Covid-19 has compounded this with new research showing $1 trillion could be lost from global growth as female workers fall out of the workforce.”
The new targets will be endorsed on Wednesday, when the foreign ministers from the G7 countries of Britain, US, Japan, France, Italy, Canada and Japan sign the Girls’ Education Political Declaration.
