British Iranian national Nazanin Zaghari-Ratcliffe was on Monday sentenced to an additional year in prison for "spreading propaganda against the system".
Zaghari-Ratcliffe has already served a five-year prison sentence in Iran for spying, charges her family and employer, the Thomson Reuters Foundation, has always denied.
Her lawyer Hojjat Kermani said her second charge was over her 2009 participation in a protest in front of the Iranian embassy in London. She faces a one-year ban on leaving the country.
Her husband, Richard Ratcliffe, has told the BBC they will appeal.
British Foreign Secretary Dominic Raab wrote on Twitter that "this is a totally inhumane and wholly unjustified decision."
"We continue to call on Iran to release Nazanin immediately so she can return to her family in the UK," he added.
It comes as Iran and Britain negotiate over a longstanding dispute over an arms sale from the time of the shah.
Tulip Siddiq, MP for Hampstead and Kilburn, the London constituency where the family resides in the UK, described the latest ruling as "absolutely devastating" and said it constitutes "another abusive use of her as a bargaining chip".
Zaghari-Ratcliffe's first sentence came to an end in early March. She had been released from prison and placed under house arrest a year earlier due to the COVID-19 pandemic.
The charge for which she was just sentenced was announced in the autumn.