However, Ghorban Ali Dorri Najafabadi, an Iran prosecutor, announced that a "considerable" number of protesters would be freed by end of the Iranian week on Friday.
On Tuesday, the authorities freed 140 protesters, while about 200 remain behind bars, including 50 suspected of masterminding riots, according to an MP who visited detainees.
The moves are being seen as gestures to the opposition movement which has branded Ahmadinejad's landslide election win a fraud and protested over the subsequent crackdown on demonstrators and political activists.
|Iranian authorities released 200 people on Tuesday, but 200 more were kept in jail [AFP]
But the authorities are continuing to ban opposition gatherings and have refused to issue a permit for a planned mourning ceremony for slain protesters on Thursday.
Ayatollah Mahmoud Hashemi Shahrudi, the chief of the judiciary, ordered officials to decide on the fate of protesters within a week on Monday, while Ahmadinejad himself told Shahrudi to release them by August 7, the birth anniversary of Imam Mahdi.
Ayatollah Ali Khamenei, Iran's supreme leader, also ordered the closure of a jail that was "not up to required standards", this week.
Hossein Ali Montazeri, a senior Iranian cleric, lashed out at the regime over the deaths of protesters in custody, after media reports that four had died.
"Those who are behind bars are being forced to confess under torture and every day a body is being delivered to their family," Montazeri said in a letter on his website.
"What is their sin, except silently protesting against several wrongdoings, offences and fraud in the election," Montazeri said.
Amid the mounting political tensions, Ahmadinejad's standing has been weakened even within his own camp, forcing him into a humiliating climbdown over a political appointment blocked by Khamenei.
Ahmadinejad's post-election troubles stemmed from his choice of a controversial aide as his first deputy and his tardiness in terminating the appointment despite Khamenei's orders.
He also sacked Intelligence Minister Gholam Hossein Mohseni Ejeie reportedly after a quarrel over the delay in dismissing Esfandiar Rahim Mashaie as first vice president, further irking the powerful conservative wing.
"Mr Ahmadinejad must apologise to people," said the front-page headline of Yalesarat, a weekly newspaper.
"You have preferred to pour your love on someone like Mashaie than the leader. Mr Ahmadinejad, if this attitude continues, we want you to return our votes," it said.
Mashaie, who provoked controversy last year for saying Iran was a friend of the Israeli people, subsequently stood down after Khamenei's order, but was immediately appointed the president's chief of staff.