Pro-reform clerics in Iran stepped up criticism of the authorities on Sunday after more than a week of unprecedented popular defiance against the leadership of the Islamic Republic.

But in an indication of their determination to crack down hard on demonstrations which culminated in the death of at least 10 people on Saturday, authorities dismissed the protesters as 'terrorists' and rioters.

They also detained the daughter of former President Akbar Hashemi Rafsanjani during an opposition rally in Tehran on Saturday, according to state media.

A disputed June 12 election which returned to power hardline President Mahmoud Ahmadinejad has sparked the most violent unrest since the 1979 Islamic Revolution which ousted the US-backed shah.

As authorities fulminated against protesters backing defeated presidential candidate Mirhossein Mousavi, moderate former president Mohammad Khatami signalled increased opposition among pro-reform clerics to Iran's conservative leadership.

'Preventing people from expressing their demands through civil ways will have dangerous consequences,' Khatami, a Mousavi ally, said in a statement, the semi-official Mehr news agency reported.

His comment, implying criticism of Supreme Leader Ayatollah Ali Khamenei who has backed a ban on protests and defended the outcome of the election, found an echo with Grand Ayatollah Hossein Ali Montazeri, the most senior dissident cleric.

'Resisting people's demand is religiously prohibited,' said Montazeri, an architect of Iran's 1979 Islamic revolution who fell out with the present leadership and has been under house arrest for some years.

In a statement on his website, Montazeri called for three days of national mourning for those killed.

Mousavi, who came second to Ahmadinejad in the poll and whose followers have spearheaded protests, says the election was rigged and must be annulled.

Iran state television said 10 people were killed and more than 100 others injured in protests held in Tehran on Saturday in defiance of a warning from Khamenei. A separate report put the number of deaths at 13.

State television said the violence included the torching of a mosque, which it blamed on 'rioters'. 'In the unrest leading to clashes 10 people were killed and more than 100 wounded,' it said. 'The presence of terrorists ... in yesterday's event in Enghelab and Azadi avenues was tangible.'    

The harsh tone suggested the authorities may be preparing for a crackdown to end more than a week of protest. Ahmadinejad meanwhile accused the United States and Britain of interfering in Iran's affairs.

'I advise you (the United States and Britain) to correct your interfering stances,' Ahmadinejad was quoted by ISNA news agency as saying at a meeting with clerics and scholars.

Riot police were deployed in force on Saturday, firing teargas and using batons and water cannon to disperse groups of several hundred Iranians who had gathered across the city.

Rafsanjani's daughter, Faezeh, was detained on Saturday with four other relatives for 'alleged involvement in post-election incidents', Iran's English-language Press TV said.

US President Barack Obama, in the forefront of diplomatic efforts to halt an Iranian nuclear programme the West fears could yield atomic weapons, urged Tehran to 'stop all violent and unjust actions against its own people'.

'The Iranian government must understand that the world is watching. We mourn each and every innocent life that is lost,' Obama said in a statement.

British Foreign Secretary David Miliband rejected Ahmadinejad's charge. 'The UK is categorical that it is for the Iranian people to choose their government,' he said.

German Chancellor Angela Merkel, in a statement, urg