Iran's Islamic leadership is prepared to perform a limited recount of disputed presidential elections, drawing the ruling clerics deeper into a showdown that began with street clashes and quickly moved to the highest levels of power.
Iran's opposition announced that another day of street demonstrations would be held Wednesday.
Despite official warnings and a ban on street demonstrations, some Web sites allied with opposition leader Mir Hossein Mousavi said supporters should gather in a downtown square in the late afternoon on Wednesday.
The announcement raised the prospect of further clashes with security forces.
Iran's powerful Guardian Council on Tuesday rejected a call to annul last week's disputed election that gave incumbent President Mahmoud Ahmadinejad another term, but the 12-member body agreed to conduct a selective recount, a move unlikely to placate angry reformists.
Iran's state radio also said seven people had been killed in shooting that erupted after people at an "unauthorized gathering" Monday night in western Tehran "tried to attack a military location."
Meanwhile, thousands of pro-government demonstrators gathered in the capital's Valiasr Square in a demonstration aimed at countering the tens of thousands of fist-waving protesters who have denounced Ahmadinejad's claim to a landslide re-election. Since Friday's vote, Iran has seen the largest protests since the 1979 revolution that swept the Shah from power and installed an Islamic government.
Despite the unrest, Ahmadinejad went ahead with a trip to Russia for a regional security summit, choosing to play down the protests and put on the appearance of business as usual.
So far the opposition anger has been focused on the election results, which reformist leader Mousavi claims were marred by fraud and robbed him of victory. Hundreds of thousands of Mousavi's backers poured through Tehran on Monday in a massive show of unity that ended in bloodshed when seven people were killed in a confrontation with pro-regime militiamen.
Also Tuesday, Iranian authorities restricted all journalists working for foreign media from firsthand reporting on the streets. The order allows those journalists to work only from their offices, conducting telephone interviews and monitoring official sources such as state television. It blocks images and eyewitness descriptions of the protests and violence that has followed the disputed election.
Sen. John McCain (R-AZ) said Tuesday that President Obama is not speaking out strongly enough against Iran's leadership. On Monday, Obama said an inquiry into the disputed presidential election should go ahead without violence and said he didn't know who rightfully won the Iranian balloting, but that Iranians have a right to feel that their votes matter.
McCain, who lost to Obama in last year's U.S. presidential election, called on the president to turn up his rhetoric.
"He should speak out that this is a corrupt, flawed sham of an election and that the Iranian people have been deprived of their rights," McCain said Tuesday on CBS.
But Sen. Richard Lugar (R-IN), the leading Republican on the Senate Foreign Relations Committee, said the Obama administration's arm's-length stance is correct.
"I think for the moment our position is to allow the Iranians to work out their situation," Lugar told NBC. "When popular revolutions occur, they come right from the people."
Obama on Tuesday said he believes "something has happened in Iran," with Iranians more willing to question the government's "antagonistic postures" toward the world.
"There are people who want to see greater openness and greater debate, and want to see greater democracy," he said during a Rose Garden news conference. "How that plays out over the next several days and several weeks is something ultimately for the Iranian people to decide, but I stand strongly with the universal principle that people's voices should be heard and not suppressed."
From NPR and wire service reports