Iranian pilgrims will be barred from participating in the annual Islamic Hajj pilgrimage, according to authorities.

Iran accused Saudi Arabia of "sabotage" and failure to guarantee pilgrims' safety as it announced its Shi'ite Muslims would not attend the religious festival. In return Saudi Arabia, which oversees the pilgrimage to Mecca, accused Iran of effectively depriving its citizens of the religious duty.

The spat has escalated after hundreds of Iranians died in a crush at last year's Hajj. The Saudi government subsequently cut diplomatic ties with Iran when its Tehran embassy was stormed in January after the Saudi execution of a Shi'ite cleric.

The dispute has provided another arena for discord between the conservative Sunni Muslim monarchy of Saudi Arabia and the Shi'ite republic of Iran, which back opposing sides in Syria and other conflicts across the region.

"Due to ongoing sabotage by the Saudi government, it is hereby announced that... Iran's pilgrims have been denied the privilege to attend the haj this year, and responsibility for this rests with the government of Saudi Arabia," Iran's Haj and Pilgrimage Organization said in a statement carried by state media.

Saudi media earlier said an Iranian delegation had left the kingdom after the second attempt to reach a deal failed. Saudi Arabia has blamed Iran for the impasse.

"Saudi Arabia does not prevent anyone from performing the religious duty," Saudi foreign minister Adel al-Jubeir said at a news conference with visiting British foreign secretary Philip Hammond.

"Iran refused to sign the memorandum and was practically demanding the right to hold demonstrations and to have other advantages... that would create chaos during Hajj, which is not acceptable," al-Jubeir added.

Iranian culture minister Ali Jannati said the issue of ensuring the safety of the pilgrims was paramount for Tehran following the death of hundreds of Iranian pilgrims last year.

"The Saudi government deliberately acted in a way to prevent Iranian pilgrims from... attending Hajj this year," Jannati told Iran state television.

Eight months after the last Hajj, Saudi Arabia has still not published a report into the disaster where more than 700 pilgrims were killed, the highest death toll at the annual pilgrimage since a crush in 1990.

Additional reporting by Reuters.