Bolstered by a dramatic intervention by Iran's supreme leader Ayatollah Ali Khamenei, the hard-line Press Court ordered the immediate suspension of the popular Bahar daily, published by a close aide to President Mohammad Khatami.
Khamenei, who has the final say in matters of state, stepped in dramatically Sunday to block a bid by the reformist parliament to ease Iran's restrictive press laws.
Khamenei's move not only caught the reform movement by surprise but also capped a wave of setbacks for the independent press. Almost 20 publications were banned in two days in April.
Thousands of hard-liners protested outside parliament Tuesday, calling for the death and expulsion of reformists who dared challenge Khamenai's order to halt debate on easing press laws.
"The blood in our veins is a gift to the leader. Our eyes are a gift to the leader," they chanted, many holding portraits of Khamenei.
A U.S. spokesman earlier said Washington had "serious concern" about Khamenei's intervention and called on Iran to respect free speech. Iran promptly denounced the interference.
"Some are abusing freedom to take advantage of the current atmosphere. They are taking aim at the people's religious beliefs so they can restore American colonialism and dictatorship," said one conservative student leader.
Demonstrators also called for the execution of lawmaker Mohammad Rashidian, who sought to debate the proposed changes two days ago.
Rashidian angered hard-liners because he tried to pursue debate even after Khamenei's order. The hard-liners were also angered that Rashidian, in his arguments in parliament broadcast live on national radio Sunday, referred to Khamenei as Mr. Khamenei without the title "ayatollah," and implied that the religious leader was not acting in accordance with Islamic law.
Bahar first came out after the wholesale closure of pro-reform newspapers in April and a crackdown which saw prominent journalist and editors imprisoned, some for long terms. It became one of Iran's best-selling dailies.
The paper, published by Khatami's press aide Saeed Pourazizi, had had brushes with the Press Court but managed to survive until now by toning down its coverage and commentary.
Fallout continued Tuesday over the aborted effort to alter the press law.
Reformist Ahmad Pournejati resigned as head of parliament's Cultural Committee to protest the ban on debate. His committee had proposed an amendment that would have given the press greater freedom.
The Freedom Movement of Iran, the only liberal dissident party tolerated by the government, expressed concern over Khamenei's intervention in the parliament's affairs.
"These kinds of interferences are not in the benefit of the Islamic republic and not in the benefit of the supreme leader," said a statement issud by the group Tuesday.
But Karim Arghandepour, the pro-reform deputy head of Iran's Press Guild Association, said: "I think the reformists should at first try to reduce tensions which are dangerous for reforms."
He called on reformists to hold talks with senior officials and lobby for launching new newspapers to enable them to reach the public.
Reformers are now worried that they have been deprived of their primary voice just as the next presidential campaign, set for May, heats up. Conservatives control state broadcasting and the influential Friday prayer apparatus in the mosques.
Iran's newspapers, which function as surrogate political parties, have emerged as the central battleground between the clerical establishment and reformers grouped around Khatami.
Since Khatami's 1997 election, the hard-liners have lost much power, but they still control the judiciary, military and television network and are backed by Khamenei, who has the last say on all matters.
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