European diplomats were considering whether to withdraw the ambassadors of all 27 European Union member nations from Iran in a dispute over the detention of the British Embassy's local personnel, The New York Times reported Wednesday. According to the report, European diplomats said that no formal decision to bring back ambassadors had been made, but that the measure was being considered as the EU - Iran's biggest trading partner - tries to work out how to defuse the dispute without putting other embassies in Teheran in similar peril. If the EU were to decide to withdraw all 27 ambassadors, the move would represent an unusually harsh display of European anger at Iran's behavior, and several diplomats said the European Union would prefer to avoid such action. Diplomats in Europe said they could not recall such concerted action by the entire, expanded bloc. In an initial response, a top Iranian military official demanded that the Europeans apologize for interfering in the country's affairs, adding that such interference disqualified EU countries from negotiating on Iran's nuclear project. In a statement quoted by the semi-official Fars news agency on Wednesday, Iran's chief of staff, Hassan Firouzabadi, was quoted as saying that because of the European Union's "interference" in "the post-election riots, they have lost their qualification to hold nuclear talks with Iran." "Before apologizing for their huge mistake," he said, the European countries have "no right to talk about nuclear negotiations," according to the Fars report quoted by Reuters. The New York Times report came just hours after Iranian media said authorities had released all but one of the Iranian employees of the British Embassy who were detained last week over their alleged involvement in protests following the disputed elections. According to the report, carried by state-run Press TV on Wednesday evening, the sole Iranian remaining in custody was being held on suspicion of playing a role in post-election violence. Britain did not immediately respond to word of the releases Wednesday. The UK has said nine of its local employees initially were arrested last week, and five were released on Monday. Both Britain and the European Union have condemned the detentions as "harassment and intimidation." AP contributed to this report.