Government wants constructive Iceland relationships

LONDON (Reuters) - The government said on Friday it had always wanted a constructive relationship with Iceland, a day after a row broke out over how to deal with hundreds of millions of pounds of deposits trapped in collapsed Icelandic banks.

"We've always made it clear we want to work constructively with the Icelandic government," Prime Minister Gordon Brown's official spokesman said.

"In the last period of time it has been possible to discuss these matters with the Icelandic authorities -- which had proved difficult previously," he told reporters.

He said Chancellor Alistair Darling spoke with Icelandic Prime Minister Geir Haarde on Thursday evening. A team of Treasury officials went to Iceland on Friday for talks.

(Reporting by Adrian Croft, editing by David Clarke)