Two of Britain's leading experts on Iran have criticised the UK's policies towards engaging with Tehran, painting a bleak picture in terms of prospects for achieving a solution on the Iranian nuclear programme.

Sir Richard Dalton, who was UK ambassador to Iran between 2003 and 2006, told a conference at the International Institute for Strategic Studies in London (IISS) that the prospects for dialogue were "extremely poor".

The conference was organised before an alleged plot to assassinate the Saudi Ambassador in Washington last month, which the US blamed on the Iranian government, and which has led to America's relations with Tehran deteriorating further.

Sir Richard told the conference: "I am an optimist, but those who are optimists find it hard to sustain that, particularly at the moment. We are in a very dangerous situation with intransigence on both sides."

He said there was now a clear gulf between what senior politicians in London and Washington were thinking privately and what they were saying publicly. In a particularly stinging criticism of Foreign Secretary William Hague, he told the conference that William Hague's most recent comments on Iran had left the wider British public "completely in the dark."

Sir Richard was referring to comments made by Hague in the Commons on 9 November, when the foreign secretary said: ""We are prepared to have further talks, but only if Iran is prepared to engage in serious negotiations about its nuclear programme without pre-conditions. If not, we must continue to increase the pressure and we are considering with our partners a range of additional measures to that effect."

The former ambassador told the IISS that although Iran was nearing the point when it could develop a nuclear weapon, he believed Tehran was pushing towards the goal of what he called "latency" - where Iran would have the capability to produce nuclear missiles, but would only hold that option in reserve.

"Iran believes it is gaining strength as the West declines," he said, adding he wasn't sure that any further sanctions by Tehran by the West would "lead to any positive development."

He finished by saying: "We need more frankness about the limits of the current policy, including the limits and dangers of the military option. We need frankness about what is driving policy, which I think is short-term political consideration.

"If this issue is left, it doesn't get better. In fact it gets worse."

Sir Richard's opposition to greater sanctions was echoed by former Tory Chancellor Lord Lamont, who is now the chairman of the British-Iranian Chamber of Commerce. Speaking primarily from a business perspective, Lord Lamont criticised sanctions against Iran, particularly the broad-spectrum sanctions imposed by the United States.

"The regime in Cuba would have fallen long ago if it had not been for sanctions. Much the same is happening with Iran," he said. "I don't know what will work, but I know that sanctions don't work."

Lord Lamont accused the US of "trying to impose its own laws on other countries in an extra-territorial way. The US leans on banks financing legal Iranian industries like pistachios, and tells them they cannot do business in the US if they continue.

"It drives people in Iran towards connections with smuggling. If we had completely free trade we would have lessened the power of the Revolutionary Guard."

Lord Lamont said the West had developed a "myopic" relationship with both Saudi Arabia and Iran, selling arms to the Saudis in the false belief that Iran could possibly attack the country. While Lord Lamont said he believed thousands of political prisoners were currently being held in Iran, he failed to understand the West's attitude to the Saudis. "

"The west regards Saudi as a moderate regime, but there is quite a lot that Saudi has to answer for a variety of human rights issues," he said.

"We are about to see more sanctions, all that will do is damage the private sector in Iran, and increase the influence of the revolutionary guard."