The British special envoy to Yemen has strongly warned that the turbulent country faces a very dangerous situation.

“It is possible to see tension between Iran and Saudi Arabia fought out in Yemen,” Sir Alan Duncan said.

This was the first British reaction to the Houthis' recent steps in Yemen.

On Friday, the Shia Houthis announced they were dissolving parliament and setting up an interim government.

The UN Security Council has warned of “further steps” if the group do not immediately return to negotiation tables with other parties.

The Gulf Cooperation Council, led by Saudi Arabia, has also expressed alarm and called for stronger international response to the Yemeni crisis after the Houthis' moves.

The GCC cast the takeover a "threat to the security and stability of the region and the interests of its people.”

“You could see civil war and the rise of southern separatism, which would attempt to divide the country once again into two,” Duncan told BBC Radio.

“All of this could be happening at the same time as economic collapse and humanitarian need,” he added.

Thousands of Yemenis have been protesting in several cities in the centre of the country against the “political takeover” by Houthis.

They denounced the declaration of Houthis' Revolutionary Committee on Friday of a new power framework in Yemen as a coup.

The protesters also demanded Houthis should withdraw their fighters from major cities in Yemen, the poorest Arab country.

Trying to justify the takeover of power, the Houthi leader, Abdulmalik Al-Houthi, said they were still open to partnership with other political factions.

“I'm afraid the ingredients in the melting pot of Yemen are very very perilous at the moment,” the British envoy said.

He also expects escalation of fighting between Houthis, who are widely believed to be supported militarily from Iran, and Al-Qaeda-affiliated militants in Yemen.

“You can see of course the Houthis and Al-Qaeda at odds,” Duncan said.