Officials of the pro-reform government said Ayat Allah Khamenei, who has the last word on all state matters, had for a second time called on the conservative Guardian Council to review hundreds of bans it put on candidates for the 20 February vote.
After several days of mounting tension, during which scores of reformist lawmakers resigned and the government threatened not to stage the parliamentary polls, a solution was now in sight, officials said.
"We hope that by tomorrow afternoon we can reach acceptable results which could prepare the ground for the government to be able to hold the election," government spokesman Abd Allah Ramazanzadeh said after a cabinet meeting.
Khamenei has ordered a review of the bans before. But the Guardian Council, which vets election candidates, last week only reinstated one third of those who appealed, leaving more than 2000 off the ballot.
Reformist allies of President Muhammad Khatami, who had previously said they would boycott the election even if all of the barred candidates were reinstated, hinted they might be prepared to accept the new deal.
More than 80 current members of
parliament were barred
"If there are positive developments, we will review our decisions for the future," said Ali Shakourirad, a member of Iran's largest reform party. "I believe there is a lot of hope but we should wait and see what practical steps are taken."
The vast majority of those barred were reformists and included more than 80 current members of the 290-seat parliament.
But in a sign that the Guardian Council, an unelected body dominated by religious conservatives, might reinstate only a few more candidates, one of its members insisted that those disqualified were unfit to hold office.
"I swear that all the disqualifications were based on law," the ISNA students news agency quoted Ayat Allah Muhammad Yazdi as telling religious students in the holy city of Qom.
Reformist students have called
for referendum on elections
"You as clerics should quietly inform people that those legislators who talked against Islam will repeat it if they are elected again. Parliament is not a place for such people."
Analysts said reformists now face a tough choice. If they accept a deal to reinstate some of the candidates, they may further damage their standing with a public already disappointed by their failure to overcome resistance to reform.
But if they insist on boycotting the election, they risk handing control of parliament to conservatives on a plate.
In a speech, Khamenei said such disputes were nothing new for the Islamic Republic, which marks its 25th birthday next week.
"There have always been disputes. (But) there is no knot which cannot be untied," he said.
"The elections must be held on the appointed date of February 20 without a single day of delay"
Ayat Allah Khamenei,
But Khamenei made clear he would not countenance any delay in the elections, as reformists had urged.
"The elections must be held on the appointed date of February 20 without a single day of delay," he said.
Khamenei, who has tended to side with conservatives in disputes since Khatami's 1997 election win, strongly criticised reformist officials for threatening to resign over the election standoff.
"Evading responsibility by resigning or any other method is illegal and religiously forbidden," he said, suggesting those who did resign could be prosecuted.