Former British Foreign Secretary David Miliband warned on Thursday that Britain should carry out "ingenious diplomacy" to avoid a war with Iran, saying that military action would be unjustified.

As the relationship between Britain and Iran deteriorates with retaliatory actions taken against each other, Miliband warned against allowing British concerns regarding the embassy attack to become entangled with the wider nuclear issue and "played into a drum-beat of war."

Iran might be "exasperating, difficult...destabilizing the rest of the region," but military action would be unjustified, he said.

"Ingenious diplomacy" is key to stopping the situation from escalating to war, the Labor MP added.

Miliband's remarks came after the European Union agreed to impose fresh sanctions on 180 Iranian officials and firms over Tehran's controversial nuclear program.

British Foreign Secretary William Hague said after the European foreign ministers' meeting on Thursday that he "strongly" welcomed the EU's decision and "the fact that France, Germany, Spain, Italy and the Netherlands have recalled their ambassadors in Tehran for consultations."

Hague voiced Britain's strong position but also said it still looked for a "diplomatic solution."

"We will not back down and agreed today to work on further sanctions, including in the areas of finance and energy, by the next Council meeting. We want Iran to come to the table and negotiate meaningfully about its nuclear program. Despite events this week we still want a diplomatic solution."

Angry Iranian demonstrators broke into two British embassy compounds on Tuesday after Iran decided last Sunday to reduce diplomatic ties with Britain in response to its newly imposed financial sanctions.

British Prime Minister David Cameron called the action "outrageous and indefensible" and warned Iran of "serious consequences."

Britain then withdrew all its diplomats from Iran and ordered an immediate closure of the Iranian embassy in London on Wednesday. All Iranian diplomats were asked to leave Britain within 48 hours since then.