Iran is set for what its senior officials have described as "the most sensitive" elections in the history of the Islamic republic, amid economic and political discontent at home and fears of a major confrontation with the west over its nuclear programme.

More than 5,000 candidates have put their names forward for parliamentary elections in March, the first national vote since the 2009 disputed presidential poll when popular uprisings against the results challenged the legitimacy of the regime.

This week, the guardian council, a body of clerics and lawyers in charge of vetting all candidates before any elections in Iran, will publish the names of those approved by the regime. In the past, the council has blocked many, including former MPs, from running.

Less than two months before the elections, Tehran's leaders are acting to avert any possible recurrence of the 2009 unrest as calls for a widespread boycott of the vote gather pace among the opposition.

The authorities have publicly acknowledged the challenges they face. Ayatollah Ali Khamenei, the religious supreme leader, has warned that the elections could pose a risk to the country's security; he has appealed for national unity.

"To some extent, elections have always been a challenging issue for our country," he admitted. He asked people "to be careful that this challenge does not hurt the country's security". Iran's intelligence minister, Heydar Moslehi, has echoed Khamenei's remarks by describing the vote as "the most sensitive elections in the history of the Islamic Republic".

Ahmad Salamatian, a former Iranian MP based in Paris and a critic of the regime, said he believed the elections would pose a bigger challenge to the establishment than three years ago.

"In 2009, the competition was among all political factions working within the framework of the Islamic republic," he said. "But since then, the regime has narrowed its circle more than ever; in other words, with the absence of the opposition, the coming vote is a competition within that already closed circle."

It is unclear how many reformists will stand, as most appear to have decided to boycott the vote, but some have registered as independent candidates.

Many opposition groups have already said they will boycott the vote. Opposition leaders Mir Hossein Mousavi and Mehdi Karroubi have been placed under house arrest since last February.

Analysts believe the regime is trying to present its candidates as reformists. At the same time, leaders have warned they would consider any attempt to encourage an electoral boycott as a crime.

Many observers see the March elections as a battlefield between supporters of President Ahmadinejad on one side and conservatives close to Khamenei on the other. Observers speculate that Khamenei might block Ahmadinejad's parliamentary allies, arguing they belong to a "deviant current", seeking to undermine the authority of the supreme leader.

"You might think that the reformists are eliminated from politics, but look at the uprisings in the Middle East and you'd realise those who have taken power now, were the people who were absent for their dictator's latest elections," said Salamatian.

Hossein Ghazian, an Iranian sociologist based in the US, believes that Ahmadinejad has tried to show a new face in the past two years. "By distancing himself from the supreme leader, Ahmadinejad is trying to preserve his previous supporters but also reaching out to new groups of people, including those critical of the regime or the reformists and people who have remained indifferent."

According to Ghazian, the regime cannot easily silence Ahmadinejad, because "he has two important assets: one is that he has the potential to act unexpectedly and, secondly, he has taken his opponents ransom by threatening to reveal their secrets to public."

Election fears come at a time when the Islamic republic is faced with mounting economic discontent at home as economic sanctions against Iran have begun to bite. Internationally, Iran is locked in a stalemate with the west over its nuclear programme and it has recently responded to attempts at banning its oil imports by sabre-rattling and raising the stakes by threatening to close the Strait of Hormuz, a vital passageway in the Gulf where one-fifth of the world's oil passes in tankers.

According to Salamatian, by threatening to block the Strait of Hormuz, Iran is trying to benefit from a military and security atmosphere in the region to suppress any discontent at home before the elections. "In no other time in its history, the Islamic regime has relied this much on its military and security forces for its survival," he said.

Iran's intelligence minister said on Sunday that the country's secret services have arrested several people on charges of spying for the United States and seeking to undermine the elections. Heidar Moslehi did not say how many people were arrested or when.