The fate of Iran rested last night in a grubby north Tehran highway interchange called Vanak Square where – after days of violence – supporters of the official President Mahmoud Ahmadinejad at last confronted the screaming, angry Iranians who have decided that Mirhossein Mousavi should be the president of their country. Unbelievably – and I am a witness because I stood beside them – just 400 Iranian special forces police were keeping these two armies apart. There were stones and tear gas but for the first time in this epic crisis the cops promised to protect both sides.

"Please, please, keep the Basiji from us," one middle-aged lady pleaded with a special forces officer in flak jacket and helmet as the Islamic Republic's thug-like militia appeared in their camouflage trousers and purity-white shirts only a few metres away. The cop smiled at her. "With God's help," he said. Two other policemen were lifted shoulder-high. "Tashakor, tashakor," – "thank you, thank you" – the crowd roared at them.

This was phenomenal. The armed special forces of the Islamic Republic, hitherto always allies of the Basiji, were prepared for once, it seemed, to protect all Iranians, not just Ahmadinejad's henchmen. The precedent for this sudden neutrality is known to everyone – it was when the Shah's army refused to fire on the millions of demonstrators demanding his overthrow in 1979.

Download the new Independent Premium app Sharing the full story, not just the headlines

Yet this is not a revolution to overthrow the Islamic Republic. Both sets of demonstrators were shouting "Allahu Akbar" – "God is Great" – at Vanak Square last night. But if the Iranian security forces are now taking the middle ground, then Ahmadinejad is truly in trouble.

As the fume-filled dusk fell over the north Tehran streets, the crowds grew wilder. I listened to a heavily bearded Basiji officer exorting his men to assault the 10,000 Mousavi men and women on the other side of the police line. "We must defend our country now, just as we did in the Iran-Iraq war," he shouted above the uproar. But the Ahmadinejad man trying to calm him down, shouted back: "We are all fellow citizens! Let's not have a tragedy. We must have unity."

Clearly the decision of Supreme Leader Ayatollah Ali Khamenei to instruct the Council of Guardians to recount Friday's election vote had done nothing to dispel the suspicion and anger of the reformist opposition in Iran.

First it appeared that the council would examine every election result. Then only a few. Then Iranians were told that it might take 10 days to learn their decision. It was as well, perhaps, that Ahmadinejad had flown to Yekaterinburg for the Shanghai summit to bore conference delegates with his speeches instead of the Iranian people whom he believes he represents. But on Vanak Square last night, all this meant nothing.

Plain-clothes cops – perhaps at last realising the gravity of a situation which their own obedience to Ahmadinejad's men had brought about – persuaded middle-aged men from both sides to meet in the centre of the road in the middle of Vanak Square's narrow no-man's-land. The Mousavi man, in a brown shirt, placed his hands around the arms of the bearded Iranian official from the Ahmadinejad side. "We cannot allow this to happen," he told him. And he tried, as any Muslim does when he wants to show his desire for trust and peace, to kiss the side of his opponent's face. The bearded man physically shook him off, screaming abuse at him.

The two rows of police were now standing shoulder to shoulder, their linked arms holding both mobs back, as they stared at their own comrades opposite with ever increasing concern. An American-Iranian a few metres away, shouted at me in English that "we've got to prove they can't do this anymore. They can't rule us. We need a new president. Either they get their way or we get ours".

It was frightening, the absolute conviction of these men, the total refusal to accept any compromise, one side demanding obedience to the words of Ayatollah Khomeini and loyalty to the ghosts of the 1980-88 Iran-Iraq war, the other – emboldened by their million-strong march on Monday – demanding freedoms, albeit within an Islamic Republic, which they had never had before. Maybe they now have the police on their side; if last night's example was anything to go by, either some senior officer – or perhaps the cops themselves, appalled at their behaviour over the past four days – decided that the special forces would no longer be patsies to the frightening power of Ahmadinejad's ever-loyal bullies.

Only hours earlier, seven men killed by the Basiji at the end of Monday's march, were secretly buried by police in Cemetery 257, a large graveyard close to the Khomeini shrine, where the founder of the Islamic Revolution lies beneath a mosque of golden cupolas and blue-tiled walls. No such honours for the seven victims of the Basiji. They lay beneath a covering of earth, no markers on their graves, no word sent to their families of their fate.

But the pro-government newspapers in Tehran did report their deaths and one even gave its front page to the outraged condemnation of Tehran University's Chancellor at the Basiji intrusion onto the campus on Sunday night, when the security forces killed seven young men, wounded several others and smashed and looted the university dormitories. Farhad Rabar said he would pursue the killers through the courts, adding that "the invasion of the University of Tehran, which is the symbol of higher education... has caused a wave of sorrow and anger in me".

Is it too late to end this fratricidal violence now? For each side, the integrity of their cause is fast becoming more powerful than rational dialogue. The freedom which Mousavi's supporters have tasted – to ignore and disregard and despise the clerical autocracy which has so humiliated them – is now so intoxicating that they are confronting their political enemies in the street with a strange, unnerving, but genuine humour.

At one point last night, men and women wearing the green ribbons of Mousavi's election stood on the pavement beside that chilling 100 metres of no-man's-land next to chadored ladies clutching the Iranian flag – Ahmadinejad's patriotic symbol. They even chatted about the outcome of this fearful confrontation between their two sides.

It was a different narrative three hours earlier when Ahmadinejad's men and women held their own demonstration in Val-y-Asr Square. No word was said of Monday's opposition mass rally, nor of the street demonstrations in the cities of Shiraz, Mashad, Babol and Tabriz. Indeed, most Iranians have no knowledge of these events; Ahmadinejad's censors have seen to that. The banners were predictable. "Death to the Traitor" – Mousavi, of course, was the "betrayer" of the Republic. "Death to anyone who is against the Supreme Leader" – which was a bit odd because neither Mousavi nor his millions of supporters are against Ayatollah Khamenei (albeit that the two men dislike each other); it is Ahmadinejad for whom they have a visceral hatred and whom they are trying to depose.

The former parliamentary speaker, Gholamali Haddadadel, spotted Mousavi's weakest argument when he addressed a crowd that could not have been more than 5,000 strong. "Does Mousavi know how many people voted for Ahmadinejad in the rural areas and in the villages?" he asked. "Iran is not just Tehran. We know that Mr Mousavi got 13 million votes, but Mr Ahmadinejad got 24 million." But of course, those are the very statistics which Mousavi and his allies dispute. Preachers and Sayads lectured the little multitude, their bodyguards – even paramedics – keeping careful watch over them. There was a famous Iranian religious singer to preach to this banner-shrouded audience.

It was on my way out of Val-y-Asr that I noticed a truckload of men, all dressed in camouflage trousers and white shirts, many carrying police clubs, setting off to north Tehran. They were followed by the newly energised Islamist demonstrators, off on the four-mile trek up to Vanak. Two conscript soldiers were standing amid the Mousavi supporters there when an old man asked their advice. Should he stay if the Basijis break through the cordon? "The Basijis beat people hard – very hard," one of the soldiers said. And he patted the old man on the shoulder and shook his head.