The UK is mulling a cyber attack on Tehran and potential special forces assault in retaliation for an attack on an Israeli-linked oil tanker that killed a British security guard, according to reports.
A Romanian sailor was also killed in the suspected drone attack on the MV Mercer Street on Thursday, which Israel, the United States and the UK have blamed on Iran.
Iran has denied responsibility, calling the claims 'baseless'.
The UK is working with the US and Israel to determine a response and is considering a 'range of options,' The Sun reported, citing 'Government sources'.
A cyberattack would be most likely, 'a senior defence source' reportedly told the paper, explaining: 'Nobody will see it here but they will be left in no doubt you cannot kill a Brit unchecked'.
'A British national was killed and we have to make clear there are certain lines that can't be crossed,' the paper reported a 'Foreign Office insider' as saying.
Meanwhile, British commanders are said to be putting together plans for a strike against an Iran-backed 'terror team', according to The Mirror.
The paper reported that Israeli intelligence has located the area from which a team is believed to have launched the drone suspected in Thursday's attack.
It said British special forces, already in the region, were reinforced over the weekend for a 'kill or capture mission'.
The UK is mulling a cyber attack on Tehran and potential special forces assault in retaliation for an attack on an Israeli-linked oil tanker that killed a British security guard, according to reports. A Romanian sailor was also killed in the suspected drone attack on the MV Mercer Street (pictured in 2015) on Thursday
'This has reached [a] tipping point where Iran's actions can no longer be allowed to continue,' The Mirror reported a 'former British military intelligence officer' as saying.
'British special forces have been concerned about hostage taking on the high -seas for some time but are clearly going to take a more aggressive posture against Iran's proxies.'
The reported preparations come after Boris Johnson on Monday told Iran to 'face up to the consequences' of its actions following the attack.
The Prime Minister also demanded that Iranian government accept responsibility for the suspected drone strike.
Foreign Secretary Dominic Raab earlier blamed Tehran for the 'unlawful and callous' attack. Iran has denied responsibility, calling the claims 'baseless'.
The Mercer Street was sailing in international waters off Oman when it was struck by missiles thought to have been fired from an Iranian drone.
Mr Johnson told reporters yesterday: 'I think that Iran should face up to the consequences of what they have done, accept the attribution that the Foreign Secretary has made.
'This was clearly an unacceptable and outrageous attack on commercial shipping, a UK national died.
'It is absolutely vital that Iran and every other country respects the freedoms of navigation around the world, and the UK will continue to insist on that.'
The ship was sailing from Dar es Salaam, Tanzania, to Fujairah in the United Arab Emirates with no cargo on Thursday when the crew reportedly heard the noise of a flying drone followed by explosions as a hole was blasted through the top of the vessel.
The drone is thought to have been packed with explosives that detonated on impact. Two US warships escorted the tanker to port after the attack.
The reported preparations come after Boris Johnson (pictured) on Monday told Iran to 'face up to the consequences' of its actions following the attack
The strike has been linked to tensions between Iran and Israel, which has seen at least three other Israeli-connected ships targeted since February.
The 28,400-ton vessel was managed by a London-based company owned by an Israeli billionaire. Israel and the US have threatened Iran with reprisals.
Iran's ambassador to the UK Mohsen Baharvand was summoned to the Foreign Office yesterday by Middle East minister James Cleverly and warned that Iran must 'immediately cease actions that risk international peace and security'.
In a tit-for-tat response Iran then called the British charge d'affaires to a meeting in Tehran to express its anger over 'accusations against the Islamic Republic'.
A spokesman for Iran said: 'Such blame games are nothing new. Those who are responsible for this [attack] are the ones who made it possible for the Israeli regime to set its foot in this region. Iran has no hesitation in protecting its security and national interests and will respond promptly and strongly to any possible adventure.'
Mr Raab said on Sunday: 'UK assessments have concluded that it is highly likely that Iran attacked the MV Mercer Street in international waters off Oman on July 29 using one or more unmanned aerial vehicles ... The UK is working with our international partners on a concerted response to this unacceptable attack.' The UK could impose fresh sanctions on Iran.
Relations between London and Tehran remain strained over the case of dual-national charity worker Nazanin Zaghari-Ratcliffe, who served five years in an Iranian jail and remains under house arrest. Tehran has offered to free her if Britain pays a decades-old £400million debt.