Ayatollah Ali Khamenei praised them, however, for showing the will to go and fight alongside Hamas militants whose rocket fire on southern Israel prompted the Jewish state's ongoing military campaign in Gaza.
Addressing a large crowd in the holy city of Qom Thursday, Ayatollah Khamenei told the group, "our hands are tied."
Khamenei criticized some Arab leaders for showing what he called indifference towards the crisis, while acknowledging the good yet inadequate efforts of some, unspecified Islamic countries.
"By continuing political and public pressure the enemy will be forced to retreat," he said.
Since the start of Israel's military operation in Gaza Iranian students have shown their support for the Palestinian people and condemned Israel by staging demonstrations and sit-ins. (Click here to see a previous World Watch entries from Leily on Iranian protests.)
Large groups of students spent several days in the main airports in Tehran and other cities demanding to be allowed travel to Gaza to fight alongside the Palestinians. Some Iranian military and political figures supported their plea and met with them.
Khamenei issued a statement Thursday banning the students from traveling to Gaza.
Members of the Iranian Parliament and students have also demanded a ban on any commercial ties with companies that have links to Israel. Student groups have asked for a ban on the import and the sale of any products made by companies which deal with Israel.
After a group of students stormed the British Embassy compound, and some less peaceful demonstrations in front of an Egyptian diplomatic office, the Supreme Leader asked the students to refrain from attacking any embassies. Iranian authorities have greatly increased the security outside the embassies in Tehran.
Police have blocked the entrance to the street on which Egypt's primary diplomatic office is located. Local residents have been told to use other routes.
There have also been suggestions in Iran that the country should stop selling its oil to countries that support Israel. In response, Foreign Ministry spokesman, Hasan Ghashghavi told reporters that Iran will use "all diplomatic means" to help solve the crisis.
Tehran has dispatched 22 special envoys around the world to help press other governments to urge Israel to stop the attacks on Gaza, including Speaker of the Parliament, Ali Larijani and Foreign Minister Manouchehr Mottaki.