Iranian President Ali Khamenei refused Tuesday to accept the resignation of Prime Minister Hussein Musavi in what diplomats speculated was the latest twist in a power struggle among Iran's ruling clergy.

Musavi, known as a hardliner opposed to concessions to Iraq in stalled Geneva peace talks, said he wanted to quit because up to eight of his Cabinet ministers would likely be rejected by parliament, the official Islamic Republic News Agency said.It said Khamenei told Musavi by letter Tuesday that he was rejecting the prime minister's resignation.

Musavi, prime minister since October 1981, submitted his resignation to Khamenei on Monday but offered to remain as caretaker premier until a successor was announced.

The agency said Tuesday's session of parliament, which was scheduled to vote on the Cabinet introduced by Musavi July 21, was adjourned shortly after it opened because of Musavi's announcement.

Diplomats based in the Persian Gulf who monitor events in Iran, said there was little doubt Iranian strongman Ali Akbar Hashemi Rafsanjani, the speaker of parliament and acting military commander, would like to consolidate his own power base as ailing spiritual leader Ayatollah Ruhollah Khomeini comes closer to death.

"There's no love lost between Rafsanjani on the one hand and political rivals like Musavi and Khamenei on the other," one diplomat said.

"Rafsanjani is known as a pragmatist who engineered Iran's acceptance of the cease-fire with Iraq, and now wants a stable peace agreement with Baghdad - even if that means some concessions," the diplomat added, referring to the U.N.-sponsored truce and efforts to end the eight year Iran-Iraq war.