The impasse has plunged the Islamic republic, now celebrating its 25th anniversary, into what many see as its worst crisis since formation in 1979.
"We will not take part in the elections of 20 February," Muhammad Reza Khatami, head of the Islamic Iran Participation Front (IIPF) party, told a news conference.
He added the party, one of the main backers of his brother President Muhammad Khatami, would only put forward candidates for an election if the bans were overturned and the vote was postponed to allow more time for campaigning.
He also said the party was not calling on the electorate to stay away from the polling booths, adding that it was "their sovereign choice."
Reformists pushed on Monday for a postponement of the election in a showdown with hardliners which has plunged the Islamic Republic into its worst political crisis in years.
"We support the position of the government not to organise give-away elections," said Khatami, who on Sunday had warned that the disqualifications amounted to a conservative "coup d'etat" supported by the military.
After a day of high drama in parliament, where more than 120 reformist lawmakers handed in their resignations on Sunday over the vote row, there was a sense of tense anticipation on Monday.
Reformists now dominate government and parliament, but the spectre of such a "coup" being plotted by hardliners over the parliamentary elections has been quietly circulating, although few have raised it publicly.
Subsequently, the Council - ordered to carry out a review by supreme leader Ayat Allah Ali Khamenei - reinstated 1160 in a drawn-out appeals process, but some 80 sitting MPs, prominent pro-reform figures and allies of the embattled president remained barred.
Some 120 members of parliament have resigned in protest, along with all provincial governors.
Reformist MPs resigned en masse
Reformists, notably Interior Minister Abd al-Vahed Mussavi-Lari, have called for the elections to be postponed but conservatives, headed by the Guardians Council, reject such a move.
The reformists, fighting for their political survival, oppose the elections being held without the 87 outgoing MPs and most of their leading figures.
They know that a vote on February 20 in current conditions "would sound the end of the reform movement," Muhammad Reza Khatami has warned.
Even if reinstated, the reformist candidates would not have enough time to organise their campaign, he said.
As the deputies handed in their resignations on Sunday, reformist parliamentary speaker Mehdi Karoubi - who has not been barred from running again - urged Khamenei to intervene once more.
Both sides have called on
As both sides awaited Khamenei's decision on Monday, a public holiday in Iran, a conservative elections official, Hojatoleslam Ahmad Azimizadeh, spoke of dire consequences for those who boycotted the poll organisation.
"Election officials within the executive, particularly provincial governors, prefects, sub-prefects, must know that, in the present situation, any resignation is viewed as a hindrance to the electoral process and may bring about prosecution," he was quoted as saying by the state news agency IRNA.
Azimizadeh heads the electoral control commission for greater Tehran that is answerable to the Guardians Council.
He also said the Council had the power to organise an election by default, though this was open to question.