Mr. Khatami did not provide any reason for his abstention to attend the Students Day and address the students, as he used to do in the past five years, but observers said the "divorce" had taken place months ago, with its origin going as far back as the students uprising of July 1999 when Mr. Khatami sided with the leader, Ayatollah Ali Khameneh'i, who had ordered the revolutionary guards and the Basij volunteers to crush the students demonstrations.

As Mr. Khatami was making the surprise announcement during an impromptu press conference at the end of the cabinet meeting, Tehran Governor announced that he would not authorise the students to stage demonstrations in the streets of the capital.

"Students left Mr. Khatami after they realised that they could no longer trust neither him or the official reformists, whom they consider a liability, a source of the present uncertain situation in Iran", Mr. Sho’leh Sa’di told the Persian service of Radio France Internationale (RFI).

Mr. Khatami was also vague on the issue of Iran-US relations, saying that the only solution to the present stalemate is that "the one who has done injustice to the other changes its policy and behaviour".

Addressing over 40 domestic and foreign reporters, the embattled President stressed that his detente policy "embraces all countries", but said since a "hawkish wing" in Washington follows an "extremist policy" that is dangerous for the whole world, he does not see any positive sign for the future of the Tehran-Washington ties.

"We have never said that we would have no ties at any time. Our policy of détente concerns all nations. But as far as the US is concerned, we have been innocent in the past 50 years. We have been insulted and humiliated. Our rights have been ignored. Therefore, it is to the one that has committed injustice to change its behaviour. This is something we do not see in the attitude of the Americans",

Washington cut off all relations with the Islamic Republic and imposed drastic trade and oil embargo after revolutionary students stormed the American embassy in Tehran in November 1979 and took 55 staf and diplomats as hostage.

Asked by the RFI to comment on this part of the President’s remarks to the journalists, Dr. Sho’leh Sa’di, who is also a professor of international law at Tehran University said Mr. Khatami is not in a position to make any decision on important issues such as Iran-America relations.

On the question of Iraq, Mr. Khatami said though Iran had suffered by Iraq, but at the same time hopes that the United States would take no military action Baghdad.

"We are not pleased with Iraqi regime as well; it (the Iraqi regime) has done injustice against our nation; but it is not the way to deal with the issue", he added, urging the Iraqi authorities to abide by the UN Security Council’s resolution in order not to provide Washington any pretext to start the war.

"Iran feels the danger of US unilateralism not for itself, but for all humanity", Mr. Khatami said.

Mr. Khatami also had a veiled criticism at the Judiciary for its handling of the opinion poll case, saying, saying: "I am not the judge but I believe that the way the case has been dealt with, its reflection in the press and scrutiny of the issues are not sound".

At their first court hearing on Tuesday, the three poll organisers, Managing Director of "Ayandeh" Polling Institute Hoseyn Ali Qazian, and his aides Abbas Abdi and Alireza Alavitabar, as well as Managing Director of "National Institute for Research and Opinion Polls" Behrouz Geranpayeh, were charged of espionage on top secret Iranian military sites and installations, including missile bases, gathering information on the Revolutionary Guards etc for the US and French intelligence and political establishments.

Journalists in Tehran said the charges are "completely fabricated" and are "imaginary suppositions by the authorities".

Elsewhere, the President criticised the Judiciary for its failure to obey the orders of Mr. Khameneh'i for reviewing the death sentence imposed by the Judiciary on professor Hashem Aqajari.

The sentence triggered a three weeks protest and demonstrations actions by Iranian students, urging the authorities to annul Aqajari’s death sentence and allow holding a national referendum on the future of the regime.