Iran's supreme leader gave a stern warning to the pro-reform opposition on Sunday, accusing it of violating the law by insulting the memory of the Islamic Republic's revered founder, Ayatollah Ruhollah Khomeini.

Declaring that opposition rallies were illegal, Ayatollah Ali Khamenei made clear he would not tolerate any more protests by reformers seeking to revive their challenge to President Mahmoud Ahmadinejad six months after his disputed re-election.

Iran's top authority effectively sided with hardliners calling for tougher action against the opposition, which has continued to show defiance over a poll it says was rigged in the conservative incumbent's favor.

Tension has increased in Iran since student backers of opposition leader Mirhossein Mousavi last Monday clashed in Tehran with security forces armed with batons and tear gas in the largest such anti-government demonstration in months.

State television has broadcast footage of what it said were opposition supporters tearing up and trampling on a picture of late revolutionary leader Khomeini during the December 7 protests.

'They are openly violating the law, they insulted Imam Khomeini,' Khamenei said in a hard-hitting televised speech.

The opposition earlier accused the authorities of planning to use the reported 'desecration' of Khomeini's picture as a pretext for action to uproot the reform movement. Some moderate websites suggested Mousavi may be arrested.

Mousavi branded the incident 'very suspicious,' daily Andisheh-ye No reported. 'I'm sure students would never do such a thing because we all know they love Imam Khomeini,' he said.

Former president Mohammad Khatami, a Mousavi ally, urged the authorities not to make Khomeini a 'scapegoat' to confront government critics over, ILNA news agency reported.

Hardliners have in the past called for Mousavi to be prosecuted for fomenting widespread street unrest after the June poll, which triggered days of huge opposition rallies.

Any detention of Mousavi may provoke new demonstrations. The presidential election plunged Iran into its deepest internal crisis since the Islamic revolution three decades ago and exposed deepening divisions within the establishment.

Analysts say the internal political crisis has further clouded prospects for any resolution of a long-running row with the West over Tehran's nuclear program, which Washington and its allies fear is aimed at making bombs. Tehran denies this.

Khamenei, who swiftly endorsed Ahmadinejad's poll win, said 'some people violated the law, created riots and encouraged people to stand against the system,' in a clear reference to senior opposition figures.

'They also prepared the ground for the enemies of the revolution...to insult the system,' he said in an address to a group of clerics, who chanted slogans in support of Khomeini.

Khamenei said opposition rallies were illegal and urged the authorities to identify those behind the insult to Khomeini, who led the 1979 overthrow of the US-backed Shah.

The authorities have rejected opposition charges of vote fraud and portrayed the pro-Mousavi protests that erupted after the poll as a foreign-backed bid to undermine the state.

Last Monday's protests were much smaller than those in the days after the vote. But the mood seemed more radical with demonstrators chanting slogans against the clerical establishment and not just criticizing Ahmadinejad's victory.

'Those who stage illegal rallies they have no root in the society,' said Khamenei, who succeeded Khomeini after his death in 1989. 'The election is over. It was legal and they could not demonstrate their claim (of vote fraud).'

Crowds of clerics from theology schools and other leadership loyalists staged pro-government rallies in cities across Iran on Saturday and Sunday, chanting 'Death to America' and 'Death to opponents of the Supreme Leader,' official media reported.

Rejecting accusations they had insulted Khomeini, pro-reform students held 'silent gatherings' in Tehran and the city of Kashan to show their support for him, reformist websites said.

Thousands of Mousavi supporters were detained after the vote, including senior reformers. Most have been freed but about 80 people have received jail terms of up to 15 years and five have been sentenced to death over the post-vote unrest.-Reuters