The Export Credits Guarantee Department (ECGD) is to provide £28m in reinsurance cover for exporters involved in a deal to build a coal mine close to Iran's border with Afghanistan.
The cover is part of Britain's first export support deal with Iran since the Islamic Revolution in 1979, the Financial Times said.
Britain is involved in a push by the European Union to engage with Iran as part of the global coalition against terrorism. The country's help is seen as vital in promoting stability among Afghanistan's coalition government and trying to tackle drug trafficking.
The ECGD restored full coverage for exports to Iran in October 2000 following the resumption of diplomatic relations between the countries in 1998.
