The threat by Iranian Supreme Leader Ayatollah Ali Khamenei to scrap a directly elected presidency is seen as a warning to upstart President Mahmoud Ahmadinejad to back off in his power struggle with the country's deeply entrenched conservative rulers.

There's little prospect of such a momentous move before presidential elections in June 2013.

But Khamenei's warning Sunday during a speech to academics in the western province of Kermanshah sharpened the deep internal divisions within Iran's highest political echelons, with Ahmadinejad increasingly challenging the clerical leadership.

"At present, the country's ruling political system is a presidential one in which the president is directly elected by the people, making this a good and effective method," said Khamenei, 72, for whom the presidency was his own route to power in the 1980s.

"However, if one day, probably in the distant future, it is deemed that the parliamentary system is more appropriate for the election of officials with executive power, there would be no problem altering the current structure."

Abolishing a popularly elected presidency would mark the biggest change in Iran's constitution in two decades.

Khamenei's comments, only a part of a wide-ranging speech, appeared to be aimed at publicly reasserting his position as the paramount leader in Iran, while drawing a red line for Ahmadinejad and his successor to confine themselves to the executive's limited powers under Iran's theocratic system.

Many members of the conservative-dominated Majlis, Iran's 290-seat Parliament, have threatened to impeach Ahmadinejad for his defiance of Khamenei and his conflict with the clerical establishment that has controlled Iranian politics since the 1979 Islamic revolution.

That is unlikely to happen but the Majlis has gone after some of Ahmadinejad's closest associates over corruption allegations.

These actions are likely to damage the prospects of Ahmadinejad's cohorts in the March parliamentary poll, which will set the scene for the 2013 presidential election.

Ahmadinejad is midway through his second four-year term and cannot stand for a third consecutive term but he's widely seen as seeking to ensure that his closest political advisers, Rahim Mashaei, his chief of staff, will succeed him in 2013 to pursue their revolutionary objectives. Ahmadinejad's son is married to Mashaei's daughter.

In September, Mashaei was linked by the media to a $2.6 billion bank fraud, Iran's biggest financial scam. Ahmadinejad was forced to deny that publicly but the episode was widely seen as a clerical attack to discredit the president and his allies.

Khamenei's support got Ahmadinejad elected in 2005, and re-elected in the 2009 presidential poll, defeating reformist candidate Mir Hossein Mousavi in what was widely alleged was a rigged vote.

That sparked massive nationwide protests that were harshly crushed by security authorities. The deep bitterness this engendered is likely to influence the 2012 and 2013 voting.

"By helping Ahmadinejad into office twice, Khamenei believed he would have an unstatesmanlike and docile man in office," explained Ali Alfoneh of the American Enterprise Institute for Public Policy Research in Washington.

"But in reality, Ahmadinejad and the generation of war veterans he brought to office systematically changed the elites of the Islamic Republic and introduced a new ideology.

"Khamenei was too late in discovering that Ahmadinejad … is a revolutionary."

Once re-elected in 2009, Ahmadinejad, widely seen as a firebrand president in the West, moved to enhance the powers of the presidency by challenging the clerical establishment's authority.

This climaxed in April when Ahmadinejad forced the resignation of Intelligence Minister Heider Moslehi, a close Khamenei ally. Khamenei refused to accept Moslehi's resignation and reinstated him.

Khamenei won that round but Ahmadinejad further antagonized the supreme leader by sacking the oil minister in May and appointing himself caretaker oil minister. Khamenei ordered the arrest of several key Ahmadinejad aides.

The president then appointed a senior officer in the Islamic Revolutionary Guards Corps as oil minister, in an apparent bid to woo the elite Guards to his side in the confrontation with Khamenei.

The appointment of Rostam Qassemi as oil minister in August underlined the growing political and economic power of the IRGC.

That deepened concerns the elite formation, originally formed by Ayatollah Ruhollah Khomeini in 1979 to protect the fundamentalist regime, could eventually lead to a military takeover.

In the months ahead, the Guards could well decide who rules Iran.