The US-Iranian dual nationals include businessmen Siamak Namazi, 51, and Emad Shargi, 58, as well as environmentalist Morad Tahbaz, 67, who also has British nationality.

They had all been jailed at the notorious Evin Prison on spying charges.

The identity of the fourth US citizen allowed out of prison has not been made public, while a fifth man had already been released.

"My belief is that this is the beginning of the end of their nightmare," US Secretary of State Antony Blinken told a news conference in Washington, but cautioned that it was just the first step in a process.

"There's more work to be done to actually bring them home."

It follows months of negotiations between the two countries, that will include a number of Iranian prisoners being freed and the release of $6bn in Iranian government assets blocked under US sanctions.

White House National Security Council spokesperson Adrienne Watson confirmed the five were all out of prison and under house arrest, saying they should never have been detained.

She said talks for their eventual release "remain ongoing and are delicate".

Iran's mission to the United Nations said the two countries have agreed to "reciprocally release and pardon five prisoners".

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The families of the Americans held in Iran say their loved ones are "hostages" taken captive on false charges and used as bargaining chips by the government.

Namazi, who in 2016 was convicted of espionage-related charges the US has rejected as baseless, has been
detained by Iran for more than seven years.

Tahbaz was arrested in 2018 and sentenced to 10 years in prison for "assembly and collusion against Iran's national security" and working for the US as a spy.

Shargi was convicted of espionage in 2020 and also sentenced to 10 years in prison.

Jared Genser, a lawyer for one of the men, described the imprisoned Americans' movement as an "important development".

He said: "While I hope this will be the first step to their ultimate release, this is at best the beginning of the end."