Iranian state television said on Sunday that Tehran would free four Americans accused of spying in exchange for four Iranians held in the United States and the release of $7 billion in frozen Iranian funds.

Reuters reported that the US State Department has denied the Iranian claim. "Reports that a prisoner swap deal has been reached are not true," State Department spokesman Ned Price told Reuters. "As we have said, we always raise the cases of Americans detained or missing in Iran. We will not stop until we are able to reunite them with their families."

State TV, quoting an Iranian official, also said that British-Iranian national Nazanin Zaghari-Ratcliffe would be released once Britain had paid off a military debt owed to Tehran.

A British foreign office official on Sunday played down speculation about the possible release of British-Iranian aid worker Nazanin Zaghari-Ratcliffe

"Informed source says Biden administration has agreed to release four Iranian prisoners jailed for bypassing U.S. sanctions in exchange for four American "spies"," Iranian state TV said.

"Release of Nazanin Zaghari in exchange for UK's payment of its 400-million-pound debt to Iran has also been finalized. The source also said the Biden administration has agreed to pay Iran $7 billion," it said.

Iran and world powers are holding talks to revive the 2015 nuclear accord that Washington abandoned three years ago.

Iranian officials told Reuters last month that an interim deal could be a way to gain time for a lasting settlement that involved unfreezing Iranian funds blocked under US sanctions.

Tehran and the powers have been meeting in Vienna since early April to work on steps that must be taken, touching on US sanctions and Iran's breaches of the 2015 deal, to bring Tehran and Washington back into full compliance with the accord.

Iran says $20 billion of its oil revenue has been frozen in countries like South Korea, Iraq and China under the US sanctions regime since 2018.

US national security adviser Jake Sullivan, speaking on ABC's "This Week" on Sunday, said no deal had been reached with Iran in the Vienna talks.

"There is still a fair distance to travel to close the remaining gaps. And those gaps are over what sanctions the United States and other countries will roll back. They are over what nuclear restrictions Iran will accept on its program to ensure that they can never get a nuclear weapon."

Sullivan was not asked about prisoner swap or funds release.

Speaking earlier on Sunday, British Foreign Minister Dominic Raab told Times Radio: "We recognize the IMS debt should be repaid and we're looking at arrangements for securing that."

Zaghari-Ratcliffe, a charity worker, has been held in Iran since 2016. She served a five-year sentence for spying charges then last month was sentenced to a further year in jail on propaganda charges.

She has denied the accusations and her husband says she is being used as a bargaining chip by Tehran in the dispute over the debt and in the talks on the nuclear deal. 

Reporting by Reuters