Iran's opposition vows to go on challenging poll

It was the first time since Washington cut diplomatic ties with Tehran in 1980 that Iranian diplomats had been invited to the embassy parties, but the move to withdraw the invites was largely symbolic as no Iranians had even responded.

"The president's policy of engagement is obviously delayed, but we are going to have to deal with the government of Iran," Senator John Kerry, chairman of the influential Senate Foreign Relations Committee, told Reuters.

The best U.S. option for pressuring Iran, the world's fifth biggest oil producer, was to drive down crude prices by reducing America's dependence on imported energy, Kerry said.

Mohammad Marandi, who is the head of North American Studies at Tehran University, said mistrust of the United States and Britain was rife, partly due to the "very negative" role of U.S.- and British-funded Persian-language television stations.

"They are working 24 hours a day spreading rumours and trying to turn people against each other," he told Reuters.

"In the short term relations will definitely get worse, but in the long term the U.S. really has to re-think its policy and to recognise that regime change is not possible in Iran."