Reformist MPs, who declined to be named, said on Tuesday the list of those ready to resign included at least six cabinet ministers.
But the Guardian Council, an unelected hardline constitutional watchdog which has barred around half of 8200 asipiring candidates for the 20 February vote, said it would not bow to pressure.
"They have their resignation letters ready and will submit them," if the Guardian Council does not back down, said one of the MPs.
The announcement came after a top Iranian official had warned that President Muhammad Khatami's government would resign if it could not overturn the ban decision.
But government sources and liberal MPs denied a separate newspaper report that Khatami himself was threatening to quit.
The decision by the Guardian Council, a conservative constitutional watchdog comprising clerics and Islamist lawyers, has highlighted the relative impotence of Khatami's government and his reformist allies in the Islamic Republic.
Unelected hardliners also control Iran's judiciary, armed forces and state media.
About 80 members of the current 290-member parliament, including its two deputy speakers and two leading feminist MPs, have also been ruled out of the election race.
"If the government becomes impotent in securing the legitimate freedoms of the nation, it loses its legitimacy, and then, whether it dissolves itself or not, it is automatically dissolved," the official Iranian news agency IRNA quoted Vice President Muhammad Satarifar as saying.
State governors have also threatened to quit if the Guardian Council does not back down.
MPs walked out of the session
when the ban was announced
The liberal Etemad newspaper reported on Tuesday that Khatami sent a message to reformist MPs staging a sit-in protest in parliament, saying he was ready to quit over the crisis.
Barred candidates have two chances to appeal their disqualification before campaigning starts on 12 February.
Blocked at almost every turn by hardliners, who have jailed scores of reformist activists and blocked dozens of pro-reform bills approved by parliament, liberal MPs and Khatami himself have made repeated threats to resign in recent years.
Reformists hope threatening to quit may cow hardliners, concerned about possible violent street protests and heightened international pressure, into backing down, say analysts.
But the threats have so far not been carried out, devaluing their impact. "They've threatened to quit or boycott the elections so many times now that few believe them and even fewer care," said one European diplomat.
He said the Guardian Council's mass vetting of candidates was the hardliners' response to losing control of parliament in 2000.
"They wanted to make sure this time and they calculated that there wouldn't be a massive public outcry, which there hasn't been," the diplomat said.
Disillusioned by Khatami's failure to deliver on promises to enforce the rule of law, ease social restrictions and raise living standards, many of Iran's disproportionately youthful population have lost faith in the reformist movement.
The president, whom even close allies criticise for not standing up more to hardliners in his six years in power, has called the Guardian Council's decision "senseless".
Reformist MPs attending the regular legislative session on Tuesday morning -two days after they walked out of parliament's chamber in disgust at the Guardian Council's move -said they would resume their sit-in protest later in the day.