Iran's powerful Guardian Council says it is ready to recount disputed votes in Friday's presidential poll, BBC reported.
Moderate candidate Mir Hossein Mousavi has contested President Mahmoud Ahmadinejad's re-election, alleging widespread fraud.
The BBC's Jon Leyne in Tehran says the council's announcement is a complete U-turn. The official results sparked three days of huge protests.
Iranian radio says seven people were killed during demonstrations on Monday.
The Guardian Council said the votes would be recounted in areas contested by the losing candidates.
Our correspondent says this could effectively allow the defeated candidates to challenge all the votes.
New demonstrations have been called by supporters of both President Ahmadinejad and Mr Mousavi and are due to take place in Vali Asr Square in central Tehran.
Monday's protest involved hundreds of thousands of people and was one of the largest since the Iranian revolution 30 years ago.
The radio report said the attack occurred at the end of the "illegal" rally as people were heading home "peacefully".
"Several thugs wanted to attack a military post and vandalise public property in the vicinity of Azadi Square," the radio said referring to the site of the protest.
"Unfortunately seven people were killed and several others wounded in the incident."
Our correspondent says that in light of what he saw of the vast and largely peaceful protests this seems an unlikely version of events.
Dozens of opposition activists have been arrested since the protests began.
A number of senior reformist politicians, including former Vice-President Mohammad Ali Abtahi and Mousavi ally Saeed Hajarian, were detained overnight, reports said.
Iran to hold election recount
