TEHRAN - Iran's opposition stepped up its challenge to the Islamic regime on Wednesday as the authorities intensified a crackdown on the media to try to contain the biggest crisis since the 1979 revolution.

Defeated presidential challenger Mir Hossein Mousavi and his supporters called for a new round of public demonstrations and laid down the gauntlet over the disputed election that returned Mahmoud Ahmadinejad to power.

Grappling with the biggest wave of public anger in three decades of Islamic rule, Iran has lashed out at enemy "plots," hauling in foreign ambassadors and rounding up scores of reformists.

In the latest moves, the authorities threatened legal action against Iranian websites which publish material that "creates tensions" and issued a new warning to the foreign media, already facing restrictions on their work.

World governments voiced increasing alarm about the situation in Iran, but US President Barack Obama, while raising "deep concerns" over the election, said Washington would not meddle in the affairs of its archfoe.

Supreme leader Ayatollah Ali Khameini pledged to consider a partial recount after the opposition staged massive protests over what they charge was blatant vote-rigging in the election that gave Ahmadinejad another four-year term.

Supporters of Mousavi said they have called another rally in Tehran at 1330 GMT, despite a ban on such gatherings, saying it will be held "in silence without slogans."

Mousavi himself called on his supporters, who have been wearing his trademark green during their demonstrations, to also hold marches and a day of mourning on Thursday for protesters slain in the post-election clashes.

And he repeated his demand for the results of what he branded a "shameful fraud" to be annulled and a new vote called.

At least seven people have been killed and many more wounded in clashes, with protests reported not only in Tehran but also other major cities after an election that has exposed deep divisions in the oil-rich Shiite Muslim nation.

Witnesses said some clashes also erupted late on Tuesday between groups of young men and members of Iran's volunteer Basij militia.

Ahmadinejad remained defiant, saying his landslide victory in Friday's vote was proof of the people's faith in his government of "honesty and service to the people."

Khamenei, who has the final say on all matters of state, said he was asking the election body the Guardians Council and the interior ministry to examine the allegations of vote-rigging.

"If the examination of the problems require recounting of some ballot boxes, it should be definitely done in the presence of the representatives of candidates so that everybody is assured," he said.

The rights group of Iranian Nobel peace laureate Shirin Ebadi called for the authorities to put a halt to the violent crackdown it said was orchestrated by the police and the Basij.

In the latest demonstrations on Tuesday, supporters of Ahmadinejad and Mousavi staged rival rallies, each calling out hundreds of thousands of people on to the streets of Tehran, state media said.

Iranian newspapers published pictures of the demonstrations, which the foreign media were banned from covering under tough new restrictions.

Footage broadcast on the Internet has shown dramatic and chaotic scenes of violence, including one purportedly showing a protestor shot dead and others of riot police beating protestors.

The authorities have warned they would nip in the bud any "velvet revolution" and have rounded up scores of people in Tehran and other cities, including prominent reformists close to former president Mohammad Khatami.

Reformist sources and the press said on Wednesday that several more prominent political activists and journalists had been arrested.

Iran issued a new warning to the foreign media, saying some outlets had become the "mouthpiece of the rioters' movement" and warning them to their their "approach towards Iranian events."

The Revolutionary Guards, set up to defend the Islamic republic from "internal and external threats," also threatened action against the online media it charged were backed by the US and British secret services.

"We warn those who propagate riots and spread rumours that our legal action against them will cost them dearly, especially since some of the youth of this land were killed by the thugs' action, so we urge them to delete such material from their sites," a statement said.

Some phone, texting and Internet services have also been disrupted, and protestors have been turning to Twitter to spread word of the dramatic events.

Obama, who has turned his back on the policy of predecessor George W. Bush and called for dialogue with Iran after three decades of severed ties, took a cautious line on Tuesday.

He said he had "deep concerns" about the election but added: "It is not productive, given the history of US-Iranian relations, to be seen as meddling -- the US president meddling in Iranian elections."

Obama said Washington would still need to pursue "tough diplomacy" towards Iran over its nuclear drive, saying there appeared to be little difference between the policies of Ahmadinejad and Mousavi.

"Either way we were going to be dealing with an Iranian regime that has historically been hostile to the United States, that has caused some problems in the neighbourhood and has been pursuing nuclear weapons."

French President Nicolas Sarkozy, in the strongest remarks so far by a Western leader, said there was election "fraud," while other European nations have also expressed concern about the vote and the ensuing crackdown.

Hundreds of protesters have also taken to the streets of European cities and in Iran's neighbours in the Gulf in support of Mousavi, who was premier of Iran in the post-revolution era during its war with Iraq in the 1980s.

Iran has responded to international criticism by summoning EU envoys and lashing out at foreign meddling by its "enemies," accusing the United States, Britain and Israel in particular of trying to fuel chaos.