The UK should do more to constrain Iran by proscribing the Islamic Revolutionary Guards Corps as a terrorist group and formally describe the Iranian practice of detaining British dual nationals as state hostage taking, the all-party foreign affairs select committee has said.

The report finds that the Foreign, Commonwealth and Development Office’s current approach to seeking the release of detainees is not working. There are least four British-Iranian dual-nationals either in jail, on a tag in Tehran or sentenced to lengthy jail terms, including Nazanin Zaghari-Ratcliffe.

“The UK government must call the arbitrary detention of foreign nationals what it is: hostage taking,” said Tom Tugendhat, the select committee chair. “The charges, trials and convictions of British citizens on Iranian soil are a parody of a justice system. Using young mothers and retirees as bargaining chips and leverage is an unacceptable form of diplomacy.

“The FCDO has faced criticism for its apparent inertia and lacklustre response to state-sponsored hostage taking, and it is clear that a more decisive, coordinated approach is needed.”

The report urged the Foreign Office to toughen its approach to negotiating the release of UK dual nationals, including by urging the Iranian president, Hassan Rouhani, to recognise that abidance by human rights norms is a precondition of normalisation of relations with the west. It said the current range of tools on offer to the FCDO to secure detainees release are “entirely ineffectual”.

The committee argued the UK “should advocate a stand-alone addition to the 1979 Hostages Convention, which defines ‘State Hostage Taking’ and prohibits its practice”. The UK should also prioritise using its Magnitsky sanctions laws to target specific Iranian human rights abusers.

The MPs also called for the IRGC to be proscribed as a terrorist organisation due to its “clear and enduring support for terrorists and non-state actors working to undermine stability in the region”.

The report also proposes the disintegrating Iran nuclear deal is renegotiated to include binding commitments to constrain its ballistic missile programme. In the wake of Joe Biden’s election, Iran has said it is willing to comply with the existing agreement in return for the US lifting sanctions, but it is not interested in renegotiating the agreement.

In an assessment that will not be welcome in Tehran, the committee found the 2015 nuclear deal known as the joint comprehensive plan of action (JCPoA) remains only as an “imperfect rump deal”.

They call for the reworking of the deal to impose new sunset clauses, binding commitments to constrain Iran’s ballistic missile programme, and improved inspection powers for the International Atomic Energy Agency (IAEA). Many of the commitments in the 2015 deal expire within five years.

In the long term, the MPs said, the British government should outline how it plans to address Iran’s wider destabilising activities possibly by replacing the deal altogether. The committe said that the UK is well placed to consult with the US and its Gulf allies to hammer out a common strategy.

The MPs lean towards rejecting the US decision to quit the JCPoA, and impose maximum sanctions saying: “Disunity in addressing the nuclear issue, especially between the US and the E3 (Britain, France and Germany) has not served the UK’s interests. Instead, it has disincentivised Iranian engagement with the west and presented an opportunity for Russia and China to pursue their respective agendas in the Middle East. In the absence of decisive leadership and multilateral cooperation, there is a risk that Iran will turn further to Russia and China for the economic relief they can each offer at a knock-down political price.”