By Zahra Hosseinian and Hossein Jaseb
TEHRAN (Reuters) - Iran's Supreme Leader Ayatollah Ali Khamenei vowed on Wednesday he would not budge in response to protests over a disputed election that has sparked the biggest street demonstrations since the 1979 Islamic revolution.
(EDITORS' NOTE: Reuters and other foreign media are subject to Iranian restrictions on their ability to report, film or take pictures in Tehran.)
"I had insisted and will insist on implementing the law on the election issue ... Neither the establishment nor the nation will yield to pressure at any cost," Khamenei said.
Now that riot police and religious militia have regained control of the streets, Iran's hardline leadership seems to be taking a harsher line with its foreign and domestic critics.
Foreign Minister Manouchehr Mottaki said Tehran was weighing whether to downgrade ties with Britain after tit-for-tat expulsions of diplomats this week. He also announced he had "no plans" to attend a G8 meeting in Italy this week on Afghanistan.
His remarks, a day after U.S. President Barack Obama said he was "appalled and outraged" by the clampdown in Iran, provided more evidence of rising tension with the West.
Western diplomats had seen the June 25-27 event as a rare chance for Group of Eight nations to discuss with regional powers such as Iran shared goals for Afghanistan and Pakistan.
The unexpected upheaval in Iran has thrown a spanner into Obama's plans to engage the Islamic Republic in a substantive dialogue over its nuclear programme, which Tehran says is peaceful but which the West suspects is for bomb-making.
Iran has accused the United States and Britain of fomenting post-election unrest and has paraded detained protesters on state television confessing that Western media had incited them.
Security forces have clamped a tight grip on Tehran to prevent more rallies against poll, which reformists say was rigged to return President Mahmoud Ahmadinejad to power and keep out moderate former Prime Minister Mirhossein Mousavi.
Mousavi's wife, Zahra Rahnavard, demanded the immediate release of people detained since the election and criticized the presence of armed forces in the streets, his website reported.
"It is my duty to continue legal protests to preserve Iranian rights," Rahnavard, who actively campaigned with her husband before the election, was quoted as saying.
BRITONS ACCUSED OF JOINING RIOTS
Intelligence Minister Gholamhossein Mohseni-Ejei said some British passport-holders had been involved in "riots," the semi-official Fars news agency reported.
He said one of those arrested was "disguised as a journalist and he was collecting information needed by the enemies."
At least 10 protesters were killed in the worst violence on Saturday, and about seven more early last week. Many of the deaths have been filmed by fellow demonstrators, posted on the Internet and viewed by thousands around the world.
Grand Ayatollah Hossein Ali Montazeri, a dissident who is one of Iran's most senior clerics, has called for three days of national mourning from Wednesday for those killed.
Montazeri was once named successor to Ayatollah Ruhollah Khomeini, but fell out with the father of the revolution before he died in 1989. He has spent years under house arrest in Qom.
Reformist cleric Mehdi Karoubi, who came last in the election, has also urged Iranians to mourn the dead on Thursday.
The Foreign Ministry accused U.N. Secretary-General Ban Ki-moon of interfering in Iran's affairs "under the influence of some powers," an apparent dig at Britain and the United States.
Obama described accusations that his country was instigating the protests in Iran as "patently false and absurd."
Security forces have arrested 25 employees of Kalameh-y e Sabz, a newspaper whose managing director is Mousavi, the Sarmayeh daily reported. It quoted Alireza Beheshti, an editorial board member, as saying the arrests on Monday had been on the orders of hardline Tehran prosecutor Saeed Mortazavi.
Khamenei, Iran's ultimate authority, has accepted a request from the Guardian Council, which must ratify the election, to allow five more days for candidates to lodge complaints.
The 12-man council has already rejected demands for a vote re-run from Mousavi, who says he is the rightful victor.
Conservative candidate Mohsen Rezaie, who came third in the poll, said he had withdrawn his complaints, citing Iran's sensitive political and security conditions, IRNA reported.
Ahmadinejad will be sworn in before parliament some time between July 26 and August 19, the Iran News newspaper said.
(Additional reporting by Parisa Hafezi, Fredrik Dahl and Hashem Kalantari; Editing by Alistair Lyon and Charles Dick)
