Supporters of Iran's defeated presidential candidate Mirhossein Mousavi aim to keep pressure up with new protests on Wednesday over a disputed poll which has led to the biggest upheaval since the 1979 Islamic revolution.

Despite the authorities' readiness for a partial recount, they plan a fifth day of demonstrations since Friday's poll in which hardline President Mahmoud Ahmadinejad was officially declared to have won a resounding victory.

U.S. President Barack Obama, who has sought to engage Iran and asked its leadership to "unclench its fist", said protests in the world's fifth-biggest oil exporter showed the "Iranian people are not convinced with the legitimacy of the election".

Seven people were killed in a vast opposition protest on Monday in central Tehran and Mousavi urged his followers to call off a planned rally in the same area the following day.

Tens of thousands of pro-Mousavi demonstrators marched instead on Tuesday in northern Tehran and many of them to the state television IRIB building, which was ringed by riot police, witnesses said.

Wearing wristbands and ribbons in his green campaign colours, they carried his picture and made victory signs. Some were sending messages to others to meet again on Wednesday for a rally at Tehran's central Haft-e Tir Square.

"Where is our vote," read one placard in the rally. "A new greeting to the world," said another beneath a picture of the bespectacled, bearded 67-year-old Mousavi.

In an apparent bid to head off the opposition rally in the centre of the capital, Ahmadinejad's supporters mobilised a big crowd of demonstrators where Mousavi's supporters had originally planned to gather.

In what appeared to be a first concession by authorities to the protest movement in Iran's top legislative body said it was prepared for a partial recount but ruled out annulling the poll.

The decision was taken by the 12-man Guardian Council.

"TAPS OF DISCONTENT"

Further protests, especially if they are on the same scale as Monday's, are a direct challenge to the authorities who have kept a tight grip on dissent since the U.S.-backed shah was overthrown in 1979 after months of demonstrations.

Finland's ambassador to Tehran, Heikki Puurunen, said the protests had come as a surprise to Iran's leadership.

"It will continue for sure, because now in a way the taps of discontent have been opened...There is no revolution coming in my view, but some kind of compromise will be made," he told Finland's national broadcaster.

But one middle-aged Iranian businessman who was in Tehran during the Islamic revolution three decades ago said he believed Wednesday's mass demonstrations would go nowhere.

"At the end of the day nothing tangible will have changed," said the man, who said he served as a senior official under the shah. "It will be business as usual."

The United States and its European allies have found Ahmadinejad implacable in asserting Iran's right to enrich uranium, a programme that Iran says is purely peaceful but that the West fears could be used to make a nuclear bomb.

Obama told CNBC there appeared to be little difference in policy between Ahmadinejad and Mousavi.

"Either way we are going to be dealing with an Iranian regime that has historically been hostile to the United States," he said.

Mousavi has disputed official poll results and Supreme Leader Ayatollah Ali Khamenei, Iran's highest authority who has favoured Ahmadinejad, said some ballot boxes could be recounted.

"The elected president is a president...of all Iranians. Possible problems should be resolved following legal channels," Khamenei was quoted by the official IRNA news agency as saying.

"If removing these problems need recounting of some ballot boxes this should be done with the presence of the candidates' representatives," he said.

State television said the "main agents" in post-election unrest had been arrested with explosives and guns.

Discord within Iran's ruling system has never been so public. The Mousavi camp is backed by traditional establishment figures, such as former presidents Akbar Hashemi Rafsanjani and Mohammad Khatami, concerned about how Ahmadinejad's truculent foreign policy and populist economics are shaping Iran's future.

Ahmadinejad returned to Tehran from a meeting in Russia on Tuesday of the regional Shanghai Cooperation Organisation, where the leaders of Russia and China congratulated him on his re-election.

Illustrating Iran's sensitivity to world opinion, authorities on Tuesday banned foreign journalists from leaving their offices to cover street protests.