The Supreme Leader of Iran, Ayatollah Ali Khamenei, has ordered a review of the death sentence against a dissident academic in an apparent bid to defuse Iran's biggest student protests for three years.
Iranian student leaders later said they were ready to call off pro-reforms protests.
The hardline Jomhuri-ye Eslami newspaper reported that Khamenei, Iran's most powerful figure, had ordered the judiciary to review the case against history lecturer Hashem Aghajari, sentenced to hang earlier this month for insulting Islam.
"Based on the request of hundreds of university professors, the leader ordered the judiciary to carefully review this case," the newspaper quoted an informed source as saying.
"An appeals court has been authorised to carefully review Aghajari's case."
The newspaper, seen as being close to Khamenei, said the death sentence would most likely be overturned on appeal.
Student rallies and class boycotts in support of Aghajari had raised political tension in the Islamic Republic between reformists allied to President Mohammad Khatami and conservatives in control of the judiciary and other powerful state institutions.
"There's no need for the students to protest now. They presented and reached their goal which was the cancellation of the verdict," said one student leader, who declined to be named. "It's a big victory for students in defence of freedom of expression," he told journalists by telephone.
A veteran of the 1980-1988 Iran-Iraq war in which he lost a brother and a leg, Aghajari was sentenced after a closed door trial without jury for comments he made in a speech where he questioned the right of the clergy to rule. Reformists and some conservative clerics condemned the verdict and called on the leader to intervene.