Iranian protesters stormed the British Embassy compound in Tehran on Tuesday, smashing windows and burning the British flag during a rally to protest against sanctions imposed by Britain, live Iranian television showed.

Protesters threw petrol bombs and one waved a framed picture of Queen Elizabeth apparently found inside the compound, the state TV showed.

The semi-official Mehr news agency said protesters pulled down the British flag, burnt it, and put up the Iranian flag.

The incident followed Britain's imposition of new sanctions on the Islamic state last week over its nuclear programme.

London banned all British financial institutions from doing business with their Iranian counterparts, including the Central Bank of Iran, as part of a new wave of sanctions by Western countries.

Iran's Guardian Council approved a bill on Monday to downgrade Iran's ties with Britain, one day after the Iranian parliament approved the measure compelling the government to expel the British ambassador in retaliation for the sanctions.

In parliament in Tehran on Sunday, a lawmaker warned that Iranians angered by the sanctions could storm the British embassy as they did to the U.S. mission in 1979.

(Reporting by Robin Pomeroy; Editing by Mark Heinrich and Angus MacSwan)