Britain, France and Germany have announced a new financial instrument to help European companies circumvent US sanctions in a bid to keep the nuclear deal with Iran alive.

The Instrument for Supporting Trade Exchange (INSTEX), which was registered this week, is designed to facilitate legitimate trade with Iran without exposing European Union firms to US sanctions on the Islamic Republic.

The move is in defiance of Donald Trump's policy of applying "maximum economic pressure" to the country and underscores the deepening rift between Brussels and Washington over how best to handle Tehran.

Jeremy Hunt, the Foreign Secretary, called the "special purpose vehicle" a "significant step forward" in meeting European commitments under the 2015 nuclear deal, which lifted some sanctions against Iran in exchange for halting its nuclear program.

“This is a clear, practical demonstration that we remain firmly committed to the historic 2015 nuclear deal struck with Iran, the Joint Comprehensive Plan of Action, for as long as Iran keeps implementing it fully," he said.