The unexpected run-off will pitch cleric Akbar Rafsanjani against Tehran mayor Mahmood Ahmadinejad.
The 48-year-old Ahmadinejad has shown that he has significant support among the urban and rural religious poor who view him as honest, hard-working and committed to their cause.
"On one side there are almost all parties, powerful political figures and owners of great capital," the Kayhan newspaper, which is backing Ahmadinejad, wrote on Wednesday.
"And on the other side there are millions of people who finally believe they can have one of their own as president."
But the prospect of an Ahmadinejad victory has prompted various groups of politicians, students, clerics and academics to endorse Rafsanjani, who was president from 1989 to 1997.
"The fear factor is getting very intense"
"The fear factor is getting very intense," said political analyst Mahmoud Alinejad, who said some people were reacting to overblown scare stories - such as rumours that Ahmadinejad would enforce segregation of the sexes.
But Alinejad said an Ahmadinejad victory would likely cement the control by conservative clerics in the Guardian Council over Iran's dual system of democratic and theocratic institutions.
"The danger is that, for the first time, there wouldn't be any moderating, balancing factor in the system," said Alinejad.
Meanwhile, the 70-year-old Rafsanjani is deemed by Western politicians and media as a moderate better able to resolve Iran's problems, including accusations that it is building nuclear weapons.
"I believe that confrontation with the United States can be turned into interaction. It is better to have interaction," he said in an interview on state television on Tuesday night.
Rafsanjani's supporters say their
candidate is more moderate
Ahmadinejad, in contrast, has criticised the passivity of Iran's current foreign policy and said that resuming relations which Washington broke off in 1980 would not solve Iran's woes.
He has also denounced the stock market as akin to gambling and complained that officials were not doing enough to protect the country from Western cultural values.
And third-placed cleric Mehdi Karroubi, who exchanged bitter words with Supreme Leader Ayat Allah Ali Khamenei over alleged vote fraud, called on his supporters to back Rafsanjani.
"Go and vote. Otherwise they are going to make an Iranian Taliban here."
"The fanatics are coming, and people are not going to enjoy peace and security any longer," he said on Tuesday.
Ahmadinejad says allegations he would enforce strict Islamic moral codes if elected are merely baseless smears.