"How does Mr Bush, who has no legitimacy in his country and was elected thanks to court ruling in a disgraceful manner unprecedented in American history, allow himself to openly interfere in Iran and other nations' affairs? Radio Tehran, which is controlled directly by Ayatollah Ali Khameneh'i, said in an "authorised" commentary that reflects the official’s views.

"As we have witnessed over the past few days, the people of Iran want the same freedoms, human rights, and opportunities as people around the world. Their government should listen to their hopes", he said in the statement.

Mr Bush, who earlier this year linked Iran, North Korea, and Iraq in an "axis of evil", said that despite the fact that a "vast majority" of Iranians have voted for political and economic reforms, as seen from the last presidential elections, yet the non-elected body of the regime continue its hold on the government, not listening to the voice and aspirations of the people".

Ayatollah Taheri’s letter, also addressed to the Iranian nation, was published at the end of a day during which students, despite official ban, marked the third anniversary of students uprising against the regime and its clerical rulers, particularly Ayatollah Khameneh'i, the unpopular leader, who fearing the rebellion might spread beyond control, ordered security forces to put down the demonstrations "at any cost".

As a result, at least one student was killed and hundreds arrested and taken to prisons, some of them tortured.

"In Iran today, students are repressed, journalists are jailed, lawmakers are tried and intimated, lawyers arrested, newspapers are closed one after another on charges of advocating reform or criticising the ruling regime while unemployment is mounting, causing the flight of brilliant students, scholars and intellectuals", Mr. Bush further said.

"American president expressed concern over what he describes as repression against students, journalists, publications and those he refers to as reformers. But what is clear is that he has never had any concern for Iranian students or journalists, but for the failure of futility of the plots to be carried out by a bunch of troublemakers who are now in prison. Wise and revolutionary Iranian students are those same one who had stand to American hegemony before the revolution and stormed the American embassy after the revolution", Radio Tehran commented.

It was after this action by Iranian students, which was approved by Grand Ayatollah Roohollah Khomeini, the leader of the Islamic Revolution of 1979 that Washington severed all relations with Tehran and imposed harsh economic sanctions against the Islamic Republic, including in the vital oil sector.

"In a written statement issued as a flagrant interference in Iran's domestic affairs, the US president said, "their government should listen to their hopes", IRNA reported.

"The United States has blocked the Iranian assets in the US banks, the money that should have been spent in Iran's national development program, creating job and providing welfare for the nation", the agency observed, adding: "With freezing the Iranian asset, the United States has in fact proved its landmark hostility toward the Iranian nation in the past two decades".

"The United States orchestrated Iraqi aggression on Iran in 1980 as its great card to play in the field to topple the Islamic Republic and imposed sanctions on Iran during the hard time of Iraqi invasion of Iran depriving the Iranian young soldiers from defending their country with freezing Iranian assets and supported Iraq in its eight-year war on Iran", IRNA complained.

Ayatollah Ali Khameneh'i, replying Friday to Ayatollah Taheri, said his criticism encourages enemies and counter-revolutionaries, and can be exploited by foes. But he also said he shares Ayatollah Taheri's concerns about certain financial and moral deficiencies in Iran.

Ayatollah Taheri, 78, is the first cleric to resign in such a publicly critical manner during the 23 years of Iran's Islamic republic.

"Now that the Americans have so flagrantly interfered in Iran’s internal affairs, they should accept the consequences", the commentary warned, reminding that "the revolutionary people of Iran for the past 23 years have been showing that they do not retreat in the face of enemies and plots".

The first official reaction came hours after Radio Tehran commentary, with Mr. Hamid Reza Asefi, the senior spokesman of the Foreign Affairs Ministry condemning Mr. Bush’s statement as "old tactics to sow the seeds of discord between the Iranian people with the authorities".

Asefi almost repeated same arguments as developed by Tehran Radio, adding that the White House opportunist policies show that the US officials have not a proper and exact understanding of the ideals of the Iranian Islamic Revolution.

IRNA quoted the Information and Press Department of the Foreign Affairs Ministry saying Asefi also rejected as "unfounded" recent statements by President Bush's representative for Afghan affairs, the Afghan-born Zalmay Khalilzad, stating that Iran was the main factor behind the tensions in Afghanistan.