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Iran's embassy in Stockholm on Friday denied accusations it was recruiting criminal gang members, some of them children, as proxies to commit "acts of violence" against Israeli interests in Sweden.

"Paying attention to the source of this information clearly shows that it is false," the embassy said in a statement on its website, adding that media coverage based on documents from Israel's secret services was "false and baseless."

Tensions have flared between Israel and Iran since the start of the war in Gaza on October 7, and the two arch-rivals have fought a shadow war of killings and sabotage attacks for years.

On Thursday, Sweden's intelligence agency said Iran was "using criminal networks in Sweden to carry out acts of violence against other states, groups or people in Sweden that it considers a threat."

The service, commonly known as Sapo, said these were particularly aimed at "Israeli and Jewish interests, targets and operations in Sweden."

Several hours before Sapo's announcement, Swedish newspaper Dagens Nyheter (DN) cited documents from Israel's intelligence agency Mossad as saying that the heads of two Swedish gangs had both been recruited by the Iranian regime.

"Unfortunately, some Swedish media have quoted the false and baseless claims of media and institutions affiliated with this brutal regime (Israel) and published false and fabricated reports against the Islamic Republic of Iran," the Iranian embassy's statement added.

The embassy said it "expects the Swedish media not to trust the claims and reports published by the Israeli regime" and to work for "an end to the crimes of the Zionist regime in Palestine."

The diplomatic spat comes two weeks after night-time gunfire was reported outside Israel's embassy in Stockholm, and three months after police found a live grenade lying on the grounds of the Israeli compound.