By Jay Deshmukh

TEHRAN, Jul 25, 2009 (AFP) - President Mahmoud Ahmadinejad on Saturday caved in to hardliners and sacked his controversial deputy, suffering his first major blow to forge a new government since his disputed re-election last month.

Ahmadinejad said in a letter to supreme leader Ayatollah Ali Khamenei that Esfandiar Rahim Mashaie had stepped down as first vice president, a little over a week after he was appointed to the post, the official IRNA news agency said.

"I am sending you the letter of Rahim Mashaie announcing he is stepping down from the post of the vice president," Ahmadinejad wrote to Khamenei in the letter, IRNA said.

Rahim Mashaie's appointment triggered strong opposition from hardliners and plunged Iran into a fresh political turmoil even while it remains engulfed in the worst crisis since the 1979 Islamic revolution.

Widespread protests after last month's disputed re-election of Ahmadinejad which left at least 20 people dead have shaken the pillars of the Islamic republic.

Khamenei had himself ordered the sacking of Rahim Mashaie, who caused a stir last year when he said Iran was a "friend of the Israeli people."

"The appointment of Mr Rahim Mashaie as a deputy to the president is against your best interest and the government's interest, and it will cause division and frustration among your supporters," state television on Friday quoted Khamenei as saying in a letter to Ahmadinejad.

"It is necessary that the appointment be cancelled," he added in the letter.

The sacking of Rahim Mashaie comes as a blow to Ahmadinejad, who had strongly defended his decision to appoint his close aide as his deputy, going so far as to describe him as "like a pure source of water."

"Mr. Mashaie is one of Mr. Ahmadinejad's inner circle of trustees... his appointment was to have total supervision of the cabinet, especially control over sensitive sectors like oil, economy and central bank," independent analyst Mohammad Saleh Sedghian told AFP.

"His appointment was aimed at having total control over the cabinet over the next four years so there would be absolutely no opposition."

Ahmadinejad's re-election has been hotly disputed by his main challenger Mir Hossein Mousavi, who says his victory was a result of massive vote rigging.

Hundreds of thousands of Iranians poured into Tehran streets to protest their "stolen votes" before security forces launched a crackdown in which at least 20 people died and more than 1,000 were arrested.

The crisis has ricocheted all the way up the state structure, with Khamenei denouncing protesters, giving unconditional support to Ahmadinejad and declaring the poll legal.

But powerful cleric Akbar Hashemi Rafsanjani sees the Islamic regime as having lost the trust of the people, while reformists such as former president Mohammad Khatami have called for a referendum to end the crisis.

Opposition leaders Mousavi, Mehdi Karroubi and Khatami on Saturday urged Iran's clerics to intervene to help stop the spread of "oppression" by the authorities.

In a statement posted on Mousavi's website Ghalamnews, the three accused the regime of "savagery" and said its "interrogation methods are a reminder of the dark era of the Shah" Mohammad Reza Pahlavi, who was toppled in the 1979 Islamic revolution.

Their latest tirade came as a young Iranian man arrested during the protests was reported by two reformist newspapers to have died in custody.

"Mohsen Ruholamini, arrested in July 9 gatherings ... was killed," Etemad newspaper reported, quoting a pro-opposition website.

The Etemad Melli newspaper meanwhile said his family "was informed of their son's martyrdom three nights ago and was asked to turn up for the body to be handed over."

The deepening political situation saw Khamenei on Saturday launch a new call to the country's disparate groups to set aside their differences and work for the progress of the country.

"All of you should work in a brotherly way for the progress of the nation. Nobody should accuse the other without any reason. We should be fair in treating each other. We should put aside difference of opinions," Khamenei said in an address carried live on state television ahead of Sunday's birth anniversary of Shiite saint Imam Hossein.

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Copyright AFP 2009.