By Jon Leyne

BBC News, Tehran



Mehdi Karroubi has a reputation as a reformist and populist

A senior opposition figure in Iran has announced that he will challenge President Mahmoud Ahmadinejad in next summer's presidential election.

Mehdi Karroubi - a former speaker of parliament - is the first person to announce his candidacy for president.

He has criticised Mr Ahmadinejad over both foreign policy and the economy.

The announcement confirms that Mr Ahmadinejad will face a serious challenge for the presidency in next summer's election.

He could well become the first president in the history of the Islamic republic not to be re-elected after his first four-year term.

$50 handouts

Mehdi Karroubi is a reformist and something of a populist who offered anyone in Iran a $50 (£29) hand-out last time he stood for election.

There is certainly plenty of opposition to President Ahmadinejad.

The economy is in a mess and the president's foreign policy is becoming increasingly controversial.

The big question is whether the opposition can rally around a single credible candidate.

As Mr Karroubi announced his candidacy, the first thing everyone wanted to know was whether he would stand down if the former president, Mohammad Khatami, decided to run for election himself.



