Britain reopened its embassy in Tehran on Sunday, a striking signal of how Western ties with Iran have thawed since protesters stormed the compound nearly four years ago.

Foreign Secretary Philip Hammond watched the British flag being raised in the garden of the opulent 19th century building while the national anthem played. In 2011, the attackers burned the Union Jack and ransacked the ambassador's residence.

"Today's ceremony marks the end of one phase in the relationship between our two countries and the start of a new one - one that I believe offers the promise of better," he said.

The storming was a low point in diplomacy between the two countries, he said, but the relationship had improved "step by step" since the election of Iranian President Hassan Rouhani in 2013.

Hammond said the nuclear deal that the Islamic Republic struck with six major world powers last month was also an important milestone.

The agreement prompted a flurry of European visits - including from German and French ministers - aimed at positioning for the end of Iran's long economic isolation.

Britain had been held back by security concerns after the storming of its two main diplomatic compounds in Tehran on Nov. 29, 2011. The protesters slashed portraits of British monarchs, torched a car and stole electronic equipment.

Graffiti reading "Death to England" still adorns the doors to a grand reception room in a reminder of the storming.

Prime Minister David Cameron called the attack a 'disgrace', closed Britain's embassy and expelled Iran's diplomats from London. Within hours of Sunday's Tehran ceremony, which was guarded by dozens of Iranian police, Iran re-opened its embassy in London; both will be run by chargé d'affaires at first but ambassadors will be agreed within months, Hammond said.

He is only the second British foreign minister to visit Iran since the 1979 Islamic revolution that toppled the U.S.-backed shah. The last visit was by Jack Straw in 2003.

Accompanying Hammond was a small group of business leaders, including representatives from Royal Dutch Shell (RDSa.L), Energy and mining services company Amec Foster Wheeler (AMFW.L) and Scottish industrial engineering firm Weir Group (WEIR.L).

By Reuters