Question: I've just applied for an Irani an tourist visa at the Consulate in London. Bear in mind that visa regulations are fluid so the following is my experience as of March 2010.

1. Get an authorisation number via an agency. I got mine within 10 days from Iranian agency Touran Zamin http://www.touranzamin.com/. Complete the online form then email a scanned copy of your passport details. They will then ask for payment (a transfer of funds - this covers the agency's fee, NOT the visa fee). After about 10 days hopefully you will receive your authorisation number.
One UK national at the Consulate in London queued for hours only to be told that he needed an authorisation number before his visa application could be processed. Apparently in 2009 this was not the case, but as of March 2010 this was what was happening.

2. Once the authorisation number is obtained, allow 3 or 4 working days before applying for a visa at the embassy (in London it's actually the consulate you need to go to - 50 Kensington Court, not the embassy). This allows time for the number to be forwarded from Iran to your chosen visa application centre.

3. Download the visa application form/s from the website at http://www.iran-embassy.org.uk/page/?jsession=&m=vp&i=178. Tourist visas required 1 form and 1 photo as of March 2010 (business visas = 2 forms & photos). Payment can be made by debit card at the Consulate.

4. In March 2010 UK nationals had to apply in person. No postal applications were accepted. This was due to a new requirement that UK nationals have to provide fingerprints (this is the case for tourists, but presumably for business visas aswell, I don't know). This seems to apply only to Brits. God knows about Americans, I presume there's separate rules. Other European nationals did not have to provide fingerprints and could therefore make postal applications (there were French and Austrians at the Consulate who did not have to provide fingerprints).
Obviously this has a political background so if you're applying at the London embassy phone beforehand to see if you have to attend in person.
Maybe if you've provided fingerprints once, you don't have to do so again in the future - it's done electronically so should be stored on file?

The website says the Consulate is open form 12.30 - 16.00hrs. When I phoned I was advised to get there by 12.00hrs. I arrived at 12.15hrs to find over 50 people already in the queue. I eventually left, having submitted my form, at 16.15hrs. Get there early! I guess the fingerprinting and therefore the increase in personal applications has affected the number of people in the queues.

5. In a week's time I will hopefully collect my visa! I'll update this post.

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