The announcement came a day after Russian state television, Rossiya, broadcast footage showing four British embassy staff allegedly using electronic equipment concealed in a rock in a Moscow square to receive intelligence from Russian agents.
The head of the Foreign Security Service, or FSB the successor to the Soviet-era KGB, last year accused US and other foreign intelligence services of using NGOs to spy on Russia and foment political upheaval in ex-Soviet republics.
Earlier this year, President Vladimir Putin signed a law severely restricting NGOs' financing and activities.
The agency's spokesman, Sergei Ignatchenko, said the situation would be resolved "at a political level," the RIA-Novosti news agency reported, in an apparent indication that the Russian government could expel the diplomats.
Officials at the British Embassy in Moscow and Foreign Office in London declined to comment.
Prime Minster Tony Blair told a news conference he had only heard about the Russian spy allegations in media reports and declined further comment.
In 1996, Russia and Britain engaged in a tit-for-tat spying row launched by Moscow, each expelling four diplomats.
NGO claim
Among the diplomats named in Sunday’s television broadcast were Marc Doe and Paul Crompton, both of the embassy's political section.
The Moscow Times reported on its website that the four were helped by a Russian national, recruited by British intelligence, according to the FSB.
Rossiya also showed copies of documents allegedly showing that Britain had transferred money to non-government organisations (NGO) working in Russia. It described Mr Doe as the main contact point for the NGOs.
"This is the first time we literally caught them red-handed in the process of contacting their agents here and received evidence that they finance a number of non-governmental organisations," the ITAR-Tass news agency quoted Mr Ignatchenko as saying.
In addition to a downturn in Russian-British relations, the espionage announcement also reflected a toughening Russian attitude toward NGOs.
Moscow has been highly suspicious of groups that promote human rights and democracy since opposition leaders came to power in uprisings in Georgia, Ukraine and Kyrgyzstan over the past several years.
Russian officials have accused Western nations of encouraging regime change in the former Soviet Union by financing NGOs.
In a statement released following the spy allegations broadcast on Sunday, Britain's Foreign Office rejected allegations that its dealings with Russian NGOs were improper.
"It is well-known that the British government has financially supported projects implemented by Russian NGOs in the field of human rights and civil society. All our assistance is given openly and aims to support the development of a healthy civil society in Russia," the statement said.
Rossiya television showed a document authorising a transfer of ₤23,000 (A$54,496) last October to the Moscow Helsinki Group, a leading Russian human rights group that has been a persistent critic of President Putin.
The group's head, Lyudmila Alexeyeva, who was a Soviet-era dissident, said the document was a fabrication because her organisation had not received any funding from British sources since 2004. She accused the authorities of seeking a pretext to launch a crackdown on NGOs.
The Moscow Times said a total of 12 Russian NGOs had received payments authorised by Mr Doe, according to the FSB.