Iran ruled out on Tuesday overturning the disputed presidential election as U.S. President Barack Obama said there were significant questions about the poll's legitimacy and condemned the crackdown on post-election protests.
But Supreme Leader Ayatollah Khamenei agreed to a request by the top election watchdog, to extend by five days Wednesday's deadline to examine vote complaints, the semi-official ISNA news agency said.
As international alarm mounted over the crisis, the most serious challenge to the Islamic regime in its 30-year history, Britain said it was expelling two Iranian diplomats after a similar move by Tehran.
At the same time, other European nations hauled in envoys to protest at the election and the repression of protests.
The top election watchdog, the Guardians Council, insisted the vote would stand. "We witnessed no major fraud or breach," spokesman Abbasali Kadkhodai said on English-language state television Press TV.
"Therefore, there is no possibility of an annulment taking place."
However, it was later disclosed that council head Ahmad Jannati asked Khamenei for for a five-day extension "to remove any ambiguity" of irregularities, ISNA reported.
Khamenei responded by saying "I give my agreement to your proposition. Act accordingly."
The council, which has acknowledged there were more votes cast than eligible voters in 50 of 366 constituencies, had been due to make its final ruling on Wednesday.
Following the decision, one of the three defeated candidates, Mohsen Rezai, withdrew his complaints about "irregularities" in the disputed presidential election, state-run IRNA news agency said late Tuesday.
In a letter written to the Guardians Council, Rezai said he was withdrawing his complaints as the country's "political, social and security situation has entered a sensitive and decisive phase, which is more important than the election."
The opposition claims that the June 12 poll that returned President Mahmoud Ahmadinejad to power for a second four-year term was rife with fraud. Defeated challengers listed 646 irregularities and are demanding a new election.
Defeated opposition leader Mir Hossein Mousavi plans to issue a "full report of electoral fraud and irregularities," a statement on his official website said.
But the interior ministry warned Mousavi "to respect the law and the people's vote" after his defeat, IRNA said.
The authorities reject opposition charges of vote fraud, although analysis by a British think tank showed "irregularities" in the turnout and "highly implausible" swings in Ahmedinejad's favor.
Earlier this week, a Guardian Council spokesman said one common complaint was that the number of votes surpassed eligible voters in some constituencies.
Calls for halt to violence
World leaders are calling for an immediate halt to state violence against the protesters -- which has left 10 to 13 protesters dead -- but Tehran has fired back accusing Western governments, particularly Britain and the United States, of interfering.
But at a White House news conference Tuesday, Obama flatly denied meddling in Iran's affairs while saying there were "significant questions about the legitimacy" of the poll.
"We can't say definitively what exactly happened at polling places throughout the country. What we know is that a sizable percentage of the Iranian people themselves spanning Iranian society considered this election illegitimate."
Obama also strongly condemned the crackdown on protests and insisted Tehran "must govern through consent, and not coercion."
And he said he was watching how the turmoil "plays itself out" to see how it affects Tehran's prospects for engaging with the international community.
Mounting international alarm
Earlier the Iranian foreign ministry took aim at U.N. chief Ban Ki-moon for calling on Iran to stop resorting to arrests, threats and use of force against civilians, saying these remarks smacked of "meddling."
World alarm mounted over the continuing violence.
France, Finland and Sweden summoned the Iranian ambassadors in their capitals, with Paris protesting at the "brutal repression" of demonstrators.
Prime Minister Gordon Brown said Iran had taken "the unjustified step of expelling two British diplomats over allegations that are absolutely without foundation."
"In response to that action we informed the Iranian ambassador earlier today that we would expel two Iranian diplomats from their embassy in London," he told lawmakers.