Iranian President Mahmoud Ahmadinejad (center) meets with a sailor (left) following his press conference in Tehran. Iran released 15 sailors on Wednesday as a "gift" to the people of Britain in a dramatic end to a two-week ordeal that had triggered a new diplomatic crisis between Tehran and the West. -Xinhua/AFP

Iran made a surprising move on Wednesday by releasing the 15 British sailors 13 days after it detained them for "illegal entry" into Iranian waters which had strained relations between Tehran and London.

"While we insist on our rights, the 15 sailors have been pardoned and we offer their freedom to the British people," Iranian President Mahmoud Ahmadinejad told a news conference in Tehran, broadcast live on Iranian television.

"After the press conference, they will be sent to the airport to take a flight to their own country," he added.

But Iran's official IRNA news agency later quoted "an informed source" as saying that the freed British naval personnel will leave Tehran on a flight Thursday morning.

Shortly after the press conference, Ahmadinejad participated in a "ceremony" for the 15 British sailors' release in his presidential compound, Iran's state television reported.

The television's footage showed Ahmadinejad was shaking hands with the British naval personnel and talking to them. The Iranian forces seized the 15 British naval personnel on March 23 for "incursion" into its territorial waters. But Britain said its soldiers were in Iraqi territorial waters.

At the press conference on Wednesday, Ahmadinejad said that no deal had been made with Britain on the issue and the release of the British naval personnel is "a gift" from the Iranian people.

Nevertheless, the British government had promised in a letter saying that it would not repeat the incident again, Ahmadinejad said.

Iran's state television reported that the 15 British sailors and marines were watching the live broadcast and applauded when they heard the announcement of their release.

Earlier at the same press conference, Ahmadinejad awarded a medal to the commander who led the mission to arrest "trespassers."

"Here I want to thank with a medal of third-rank bravery to the commander of the forces who defended Iran's borders and arrested the trespassers," Ahmadinejad told the reporters.

The Iranian president presented the medal to Abulghasem Amanghah, Islamic Revolutionary Guards naval commander.

British Prime Minister Tony Blair welcomed the release of the15 sailors and marines who had been held in Iran for nearly two weeks, saying that Britain respects Iran's "proud and dignified history."

"I'm glad that our 15 service personnel have been released and I know their release will come as a relief not just to them but to their families that have endured such stress and anxiety," he said in a statement.

The 13-day crisis came to an end Wednesday after both Iran and Britain had softened their rhetoric and stepped up contacts over the recent days.

Blair said on Tuesday that the next two days would be "fairly critical" in the bid to secure the release of the 15 captured British sailors.

"The next 48 hours will be fairly critical," Blair told the Real Radio based in Glasgow, southwest Scotland.

On Tuesday, Iran's chief nuclear negotiator Ali Larijani told Iranian state television that Britain had started talks with Tehran on resolving the standoff over the capture of 15 British sailors.

It is "only at the beginning," he said. "Things can change and we could go towards an end of this issue if they continue on this path."

Larijani on Monday said Iran's priority was to resolve the problem through proper diplomatic channels, and "there's no need to have a trial on the detained sailors."