China has welcomed the release of the British sailors timed with the Easter holiday, who were captured when Iran alleged they entered Iranian territorial waters, an accusation firmly denied by the British Government.

A Chinese Foreign Office statement released Saturday read "China is pleased to see the issue was settled diplomatically."

Beijing had earlier called for the matter to be settled through diplomatic channels.

The sailors arrived back in Britain on Thursday after meeting with the Iranian President on their release Wednesday. They had been held captive in Iran for two weeks for allegedly intruding on Iranian waters.

The Roman Catholic Bishop of the Forces, the Rt Rev Tom Burns said their release was a "satisfactory end" to the diplomatic crisis and commended Iran for acting on the principle of forgiveness even though its accusations over the violation of Iran's territorial waters remain hotly disputed.

He said the outcome of the captivity demonstrated that there was "a goodness within mankind that can triumph over every difficulty" and that he hoped it would encourage nations to "share the limited resources available in this world for the benefit of all".

The sailors' return to the UK follows Iranian President Mahmoud Ahmadinejad's abrupt announcement on Wednesday that he would release the sailors as a "gift" to the British people.

Prime Minister Tony Blair welcomed their release, saying Britain had taken a "firm but calm" approach to the crisis.