© OtherNazanin Zaghari-Ratcliffe pictured on Sunday after her ankle tag was removed. Pic: Free Nazanin campaign
Prime Minister Boris Johnson has said it is "totally unacceptable" that Nazanin Zaghari-Ratcliffe is unable to leave Iran after her sentence ended.
The dual UK-Iran citizen has been held in the country for five years over claims she plotted to overthrow the government - which she denies.
On Sunday, the ankle tag to track her location was removed but she faces a new court date next week.
Mrs Zaghari-Ratcliffe's lawyer told Sky News she had been released after her sentence expired and could now move around, as long as she does not leave the country.
Her husband, Richard Ratcliffe, called it a "mixed" development as she is still unable to return to the UK, but said his wife was happy the ankle tag was off.
"Pleased to see the removal of Nazanin Zaghari-Ratcliffe's ankle tag," tweeted Boris Johnson.
"But her continued confinement remains totally unacceptable. She must be released permanently so she can return to her family in the UK, and we continue to do all we can to achieve this."
© Thomson ReutersBritain's Foreign Affairs Secretary Dominic Raab looks on as he walks outside Downing Street in London, Britain, February 24, 2021. REUTERS/John Sibley
Foreign Secretary Dominic Raab said "Iran's continued treatment of her is intolerable".
Mrs Zaghari-Ratcliffe was arrested at Tehran airport while taking her infant daughter to see her parents in April 2016.
The 42-year-old was later jailed over allegations she plotting to overthrow the government.
The Briton's sister-in-law told Sky News she joined a video call to Mrs Zaghari-Ratcliffe earlier on Sunday.
Rebecca Ratcliffe said she appeared "upbeat" and "pleased" the tag was gone.
But she said there was nervousness over the announcement of a new court date next Sunday - in front of the same judge who sentenced her last time.
© Sky News Screen GrabNazanin Zaghari-Ratcliffe was arrested ay Tehran airport in 2016
The family are uncertain if it will just be a formality to return her passport, or whether a new sentence will be handed down.
"We don't know and I think there's a few more sleepless nights ahead of us," said Ms Ratcliffe.
Tulip Siddiq, the detained Briton's MP in north London, said she feared the court date could result in "fake charges" to extend her sentence.
© OtherNazanin Zaghari-Ratcliffe and her family in a photo given to the media in 2017
"I'm really really praying and hoping that isn't the case, but we just don't know at this point," she said.
The MP added that it was vital Mrs Zaghari-Ratcliffe gets her British passport back.
Sky News diplomatic editor Dominic Waghorn said it was "pretty clear from the Iranians she's being held as a hostage" over decades of wrangling linked to a £400m tank deal.
He said Iran paid the money for the tanks in 1979 but they were never delivered because the Iranian Revolution happened.
"The Iranians have made it pretty clear that once that money's been paid she will be released," said Waghorn.
© Sky News Screen GrabCampaigners have fought for years to try to win her freedom
He said the money could finally be released in April, and that the latest development might be the Iranians "playing for time".
A dual Iran-UK citizen, Mrs Zaghari-Ratcliffe was allowed to move to her parents' home a year ago due to the coronavirus threat in prison.
She was under house arrest and had been wearing a tracker tag that limited her to 300m (984ft) from their Tehran flat.
On Saturday, her husband told Sky News their daughter had been using a calendar to count the days to when her mother would hopefully be released.
© PAMrs Zaghari-Ratcliffe's daughter, 6, had been counting down to the end of her sentence
Despite a long fight by campaigners, authorities always resisted pressure to release her when she was in jail - despite concerns for her physical and mental health.
Mrs Zaghari-Ratcliffe, a former aid worker who came to the UK in 2007 to study, has consistently denied claims she was trying to overthrow Iran's hardline regime.
In November 2017, the then-foreign secretary Boris Johnson harmed her case when he told an MPs' committee that she had been training journalists in Iran at the time of her arrest.
Nazanin's 'living in the moment', says sister-in-law
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Days later, she was brought in front of a court where the comments were cited as proof she was involved in "propaganda against the regime".
Mr Johnson later apologised for the "anguish" he had caused and admitted he "could and should have been clearer", saying his words "were open to being misinterpreted".
He told MPs: "The British government has no doubt Mrs Zaghari-Ratcliffe was in Iran on holiday and that was the sole purpose of her visit."
Shadow foreign secretary Lisa Nandy told Sky's Sophy Ridge on Sunday that the process of trying to free the Briton had been "frustratingly slow".
Fears of 'fake charges' against Nazanin
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She said there hadn't been "enough focus and effort" on her case - as well as those of other dual UK-Iran citizens.
"When I meet this family I feel there's not much more they can take of this to be honest," said Ms Nandy. "Other countries have made more progress in getting their nationals home.
"We need to see a real concerted effort now - led by the prime minister - to make up for some of the mistakes he's made in the past."
The Foreign Office has said it is unacceptable for Iran to detain "dual British nationals as diplomatic leverage".
"We continue to do everything we can to secure the release of arbitrarily detained dual British nationals so that they can be reunited with their loved ones," said a statement.