Bahrain, a U.S. ally which hosts the U.S. Navy's Fifth Fleet, has been in turmoil since pro-democracy protests led by its Shi'ite majority erupted last year after revolts in Egypt and Tunisia.

Bahrain asked Saudi Arabia to send forces to help it quell the protests last year. Shi'ite power Iran condemned the move, saying it could lead to regional instability. The United Arab Emirates also sent police forces to Bahrain.

Bahrain recalled its ambassador from Iran in March last year after a Bahraini foreign ministry official called the remarks "blatant interference in Bahrain's internal affairs". Tehran responded by withdrawing its ambassador in what appeared to be a tit-for-tat move.

"The ambassador of the Kingdom of Bahrain to the Islamic Republic of Iran has returned to his work in Tehran," Foreign Minister Sheikh Khalid al-Khalifa wrote on his Twitter page late on Saturday.

Bahrain's Shi'ites complain they have long been marginalised in political and economic life, which the government denies. But there has been no progress on the main opposition demand for a parliament with full powers to legislate and form governments.

Bahrain's Sunni rulers have rejected opposition calls for an elected government, and protests and clashes with police continue.

Bahrain has accused Iran of being behind the unrest, but Tehran denied this.

Tension between Iran and U.S.-allied Gulf Arab states has been high over Iran's nuclear energy programme, which Gulf rulers fear will give Tehran a nuclear weapon.