The Iranian opposition party Etemad Melli (National Trust) appointed its moderate leader as its candidate for next year's presidential elections, state media reported Tuesday.
Mehdi Karrubi, 71, is to run against President Mahmoud Ahmadinejad, the Fars news agency reported.
Karrubi is regarded as a moderate cleric who served twice as parliament speaker (1990-1992 and 2000-2004). In the 2005 presidential elections, he missed reaching the second election round by a few votes, reported dpa.
Karrubi and his Etemad Melli, which runs a newspaper under the same name, have in recent years distanced themselves from reformists close to former president Mohammad Khatami, whom the party considers to have drifted away from the Islamic system that has ruled the country since the 1979 revolution.
Khatami has not yet declared his intention to run in the next presidential election, which is likely to be held in June, but observers expected him to do so.
Another moderate candidate could be the cleric Hassan Rowhani, who served under Khatami as Iran's chief nuclear negotiator.
The renewed failure by reformists to form a united front in the next election increases Ahmadinejad's chances of being re-elected although the president is under fire for Iran's high inflation, which has mainly hit those who voted for him in 2005.
It remained to be seen whether Ahmadinejad would obtain the unanimous support of the conservative factions or, like in last March's parliamentary elections, the neo-conservatives would appoint their own candidate.
Ahmadinejad is also said to enjoy the support of Supreme Leader Ayatollah Ali Khamenei, who, according to the constitution, has the final say on all state affairs. However, the leader's advisers, such as former foreign minister Ali-Akbar Velayati, have openly criticized the president's policies.
Observers said they believed turnout would mainly determine the outcome of next year's elections.
While a low turnout would be seen as favourable to Ahmadinejad, a high one would indicate more voters coming to the polls who are against the hardline policies of the president and want a change in the country's political climate, they said.