"I consider this as a right to run in this stage. This candidacy doesn't deprive others and the path is open. What should be stressed is that the elections must be held freely."

While serving as president between 1997 and 2005, Khatami was often referred to as a "reformist" for pushing for improved relations with the West.

Refomists' approach

Al Jazeera's Teymoor Nabili, reporting from the Iranian city of Qom, said Khatami's candidacy promised an interesting election race.

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Mohammad Khatami

"It is shaping up to be quite a battle. We don't know the full electoral slate yet; there could be some candidates still be announced and maybe some drop out," he said.

"The two people in particular are the mayor of Tehran, Mohammed Ghaliabaf, who is seen as a hardliner, a former Revolutionary Guard like Ahmadinejad. But it is still an unanswered question whether he will run.

"The other reformist candidate is Mehdi Karroubi, who some people hope will stand down now that Khatami has announced his candidacy," he said.

"The whole debate here is who will lead the reformist effort against Ahmadinejad. Khatami himself has said in the past that he is not all that happy to stand; he would rather have someone else take on the mantle. But Khatami has announced he will run.

"Whether the reformists are united at all at this point is still a matter for debate."

Ahmadinejad pressured

Ahmadinejad has been criticised widely in the last year amid economic difficulties in Iran that have seen inflation rise to 30 per cent.

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Opponents have also accused him of isolating Iran on the world stage through his foreign policy speeches.

Some analysts say that the result of June's vote could depend on whether Ahmadinejad keeps the support of Ayatollah Ali Khamenei, Iran's supreme leader.

Regardless of the outcome of the election, any final decisions on policy in Iran are made by the supreme leader, not the president.

The election preparations come amid continuing accusations from Western states that Iran is seeking to build nuclear weapons, a claim denied by Tehran.

The United Nations has imposed three separate rounds of sanctions against Iran due to its continued work on uranium enrichment.

There has been speculation that Barack Obama's administration in the United States will wait until the outcome of the June vote before making any offers to Tehran.