Brown told parliament that the allegations made against the two British diplomats were "absolutely without foundation".
The expulsions mark a worsening in relations between Britain and Iran, already strained by Iranian allegations of "meddling" and its description of Britain as the "most evil" among western nations.
Brown said he regretted the "unjustified step" of expelling two British diplomats taken by Iran Monday.
"In response to that action, we informed the Iranian ambassador earlier today that we would expel two Iranian diplomats from their embassy in London."
"I am disappointed that Iran has placed us in this position but we will continue to seek good relations with Iran and to call for the regime to respect the human rights and democratic freedoms of the Iranian people," said Brown.
The onus was now on Iran to show the Iranian people that recent elections had been credible and that the repression and curtailment of democratic rights would cease.
The Foreign Office did not specify the identities of the individuals being expelled from Iran, except to confirm that they were diplomats and that the British ambassador was not among them.
It was understood that the Iranians ordered the expulsion of the two officials for "activities inconsistent with their diplomatic status" - which is diplomatic language for spying.
The Foreign Office described the Iranian allegations as "baseless". A spokeswoman said the Iranians appeared to be trying to blame Britain for the current unrest, endangering embassy staff in the process.
"We think the government of Iran is seeking to blame the UK and other outsiders for what is an Iranian reaction to an Iranian issue. This has a potential impact on our staff safety and is unacceptable. We have taken the decision to reciprocate," she said.