Sir Keir Starmer has signalled that Britain is prepared to lift sanctions on Iran if a final peace agreement between Washington and Tehran is signed.
Donald Trump announced overnight that a memorandum of understanding had been agreed, with negotiators aiming to finalise the deal by Friday.
Speaking shortly before midnight, the Prime Minister said the UK stood ready to support the technical negotiations that are now expected to begin.
He also pledged to work alongside international partners and help lead efforts to clear mines from the Strait of Hormuz, although any operation would be carried out only under an agreed framework.
Soon afterwards, Starmer joined the leaders of France, Germany and Italy in welcoming the breakthrough.
The so-called E4 group said it was willing to remove relevant sanctions if Iran takes clear and verifiable steps regarding its nuclear programme.
In a joint statement, the leaders said they would work closely with the US, Iran and regional allies to take advantage of the opportunity created by the agreement.
They described the deal as a chance to improve regional security and help stabilise the global economy.
The statement stressed that detailed negotiations must now be completed quickly and that the agreement should be implemented without delay.
The leaders also said the immediate reopening of the Strait of Hormuz, with unrestricted freedom of navigation, was essential.
They pledged support for a defensive and independent mission focused on reassuring commercial shipping and carrying out mine-clearance operations if required.
Iranian state media later reported that the proposed agreement could also include major reconstruction support for Iran, potentially worth up to £222 billion, alongside the lifting of sanctions on Iranian oil and energy exports.
According to the state-run Mehr News Agency, draft terms of the 14-point memorandum would see the strait reopened within 30 days under Iranian supervision.
Mehr also claimed final negotiations would not begin until a significant portion of Iran’s frozen assets is released, oil sanctions are eased and naval restrictions are lifted.
The report said any final agreement would ultimately be endorsed through a UN Security Council resolution.
While announcing the breakthrough, Donald Trump did not specifically mention Britain or Europe, although he confirmed the Strait of Hormuz would reopen for mine-clearance operations on Friday.
The US President has repeatedly criticised Nato allies and other partners for what he sees as a lack of involvement in Operation Epic Fury.
Earlier this year, he warned that America might not always come to Britain’s aid, accusing Starmer of making a mistake by offering to deploy British vessels only after the conflict had ended.
Trump has also mocked Britain’s aircraft carriers and criticised the Government’s response time in sending support to the Middle East.
On one occasion, he argued that Britain and Europe should take greater responsibility for securing the Strait of Hormuz themselves.
