The conflict escalated as the country's supreme leader, Ayatollah Ali Khamenei, backed by hard-line clerics and the Revolutionary Guard, issued a warning to the opposition in general and powerful cleric Akbar Hashemi Rafsanjani in particular.
"The elite should be watchful, since they have been faced with a big test. Failing the test will cause their collapse," Khamenei said Monday in a speech marking a religious holiday. "Anybody who drives the society toward insecurity and disorder is a hated person in the view of the Iranian nation, whoever he is."
The opposition was emboldened when Rafsanjani stepped into the fray with a Friday prayer sermon that sharply criticized the leadership's handling of the postelection crisis. He has re-ignited the opposition, emerging as its leading patron.
"You are facing something new: an awakened nation, a nation that has been born again and is here to defend its achievements," opposition leader Mir Hossein Mousavi said Monday in comments that appeared pointed directly at Khamenei, in a tone rarely used toward the supreme leader.
Mousavi, whose loss in recent presidential elections triggered mass protests, also derided the claim by Khamenei and hard-line clerics that the protest movement was a tool of foreign enemies. "Who believes that (protesters) would conspire with foreigners and sell the interests of their own country?" he said. "Isn't this an insult to our nation?"
A heavy security crackdown broke the demonstrations that followed the disputed June 12 presidential election, which had President Mahmoud Ahmadinejad trouncing Mousavi. But the opposition has brought thousands into the streets twice in the past two weeks.
On Tuesday, witnesses saw Iranian riot police arrest dozens of opposition supporters in Tehran, according to a Reuters report. Protesters were reportedly chanting "Ahmadinejad - resign, resign" and "Death to the dictator."
On Sunday, a leading pro-reform figure, former President Mohammad Khatami, called for a referendum on the legitimacy of Ahmadinejad's government. That could emerge as a concrete demand for the opposition to rally around. Another demand they will likely focus on is the release of the more than 500 protesters and prominent reform politicians still in prison from the crackdown.
Khamenei has supported Ahmadinejad with unprecedented openness, dismissing opposition claims he won by fraud, and his speech Monday suggested he was digging in against opposition demands. Abandoning the president now to a referendum would be a blow to Khamenei's status as supreme leader.
If the opposition were based solely on street protests or on mainstream reform politicians, it might have eventually withered under the security crackdown and the condemnations of hard-line clerics. The support of Rafsanjani - even though he is mistrusted by many reformists - gives the movement new life and an advocate within the clerical power structures.
There have always been behind-the-scenes power struggles within Iran's leadership, but rarely have they been so open or had such high stakes. The conflict now is in part over the authority of the supreme leader, who sits at the top of the country's political and religious hierarchy and who in the eyes of conservatives is the representative of God's rule.
In his Friday sermon, Rafsanjani sharply criticized the leadership for its handling of the election crisis, saying it should have listened to the people's doubts. He presented himself as a neutral figure with a solution to the crisis that would preserve the Islamic Republic - a role that in theory the supreme leader should play.
Iran's Islamic Republic is supposed to meld democracy and theology. People elect a president and parliament, but those institutions are overseen by Shiite clerics who ensure the system remains adherent to Islam. In practical terms, religious rule is carried out through three main ruling bodies, all dominated by senior clerics.
Rafsanjani's entry into the field has brought those three bodies into open conflict.
Khamenei's center of support is the Guardian Council, which has perhaps the most wide-ranging power. It reviews parliament's laws to ensure they adhere to Islamic principles, and it oversees elections, with the power to remove candidates it considers insufficiently loyal to the system. Its members are predominantly hard-line clerics, who have spoken out strongly since the election, telling the people to fall in line behind Khamenei and Ahmadinejad.
The other two bodies are both headed by Rafsanjani. The Expediency Council's role is to mediate when the Guardians Council and parliament disagree. The Experts Assembly chooses the supreme leader and in theory could remove him - though such a step has never been considered and attempting it would be a nearly unthinkable escalation.
Since Friday, hard-line clerics, politicians and media have been lashing out at Rafsanjani.
Ayatollah Mohammad Yazdi, a member of the Guardian Council, bluntly said Rafsanjani was "wrong" for contending in his sermon that popular support is the basic condition for the Islamic Republic; he said the system's legitimacy comes from God.
Yazdi accused Rafsanjani of causing rifts in the leadership and warned: "Anybody resisting against the ruling system will be broken."
Rafsanjani may try to use his levers within the system to pressure Khamenei to bend. Khamenei long ruled by balancing factions and by at least keeping an appearance of being above the fray.
Rafsanjani also has another potential tool: the many prominent clerics and theologians who don't hold positions on the ruling bodies. Many of these clerics appear discontent - some speaking out in support of Mousavi, others showing their anger by failing to explicitly back Ahmadinejad. They have wide popular followings and their support is key to the Islamic Republic's legitimacy.