Iran's supreme leader, Ayatollah Ali Khamenei, is expected to combine a call for calm tomorrow with a warning of severe consequences if protests continue over last week's "stolen" presidential election.

Khamenei's address, to be made during Friday prayers at Tehran University, will be carefully scrutinised for clues as to how the Islamic regime plans to proceed a week after the disputed poll triggered the worst unrest since the 1979 revolution.

It follows another day of massive protests in the streets of the capital, with tens of thousands of supporters of Mir Hossein Mousavi, who claims he won the election, marching silently to mourn those killed since the shock announcement last Saturday that Mahmoud Ahmadinejad had won a second four-year term.

Protesters wearing black, carrying candles and chanting "Allahu Akbar" (God is greatest) gathered in Imam Khomeini Square in the town centre as Mousavi addressed crowds through a loudspeaker. Security forces did not intervene.

Some Tehranis distributed bottles of water to protesters, thirsty in the 34C heat. Many wore black in respect for those killed earlier in the week. Some carried white flowers or photographs of the dead.

Mousavi appeared at 6pm local time and encouraged demonstrators to persist with their silent protests.

Supporters shouted "Ya Hossein, Mir Hossein," as police helicopters whirred overhead; some in the crowd showed them the victory sign. Some shops in the city closed or placed black cloth over their doors as a symbol of condolence. Bazaar workers in Tehran and the city of Tabriz were reported to be on strike in protest at the election result.

As in previous days, the march was met with light police presence as authorities rely increasingly on the Basij militia.

"Basij are feared by Iranians – nobody really understands how they operate. They do what they like," said a female protester. The Basij have responded violently to what they see as a foreign-backed attempt to unseat the Islamic Republic. Late at night, they roar through the streets on motorcycles searching for protesters returning home from daytime demonstrations. Basij checkpoints are common at night, where bearded men search cars and beat suspects.

Late on Wednesday night, Basij allegedly stormed Tehran University's dormitories, wielding knives and stabbing four students, according to students on the scene. "The government doesn't want to be blamed for the violence, so they use the Basij instead," said the female protester.

Mousavi has sent a letter of protest to Iran's state national security council complaining of plain-clothes agents using sticks, metal rods and firearms to "attack the lines of peaceful participants before the arrival of the security forces". He condemned the arrests of his allies.

The crackdown by the authorities continued today with the arrest of more reformist leaders, who were reportedly taken to secret locations in the city.

According to AUTNews, a student website, the entire chemistry department at Tehran's Sharif university – one of the country's most prestigious institutions – resigned en masse in protest against "the recent crimes and attacks". The move came after the earlier resignation of some 120 lecturers at Tehran university and academic staff at Amirkabir university.

Analysts and diplomats say tomorrow's appearance by Khamenei could be a crucial moment for the regime after it has seemed confused, offering concessions on the one hand and repression on the other.

Mousavi's response to the supreme leader's address will be crucial. It remains unclear whether he and his supporters will be satisfied with the "recount" being conducted by Iran's main electoral authority, the guardian council, which plays a key supervisory role.

The council said it had begun "careful examination" of 646 complaints. Objections include a shortage of ballot papers, pressure on voters and the barring of candidates' representatives from polling stations.

Ahmadinejad was declared winner with 63% of the vote against 34% for Mousavi, who wants the vote annulled. The council has said it is ready only to recount disputed ballot boxes but Mousavi and fellow candidates Mehdi Karroubi and Mohsen Rezaei have been told they can raise objections at a special council meeting on Saturday.

It was reported, meanwhile, that two children of the conservative former president Ali Akbar Hashemi Rafsanjani, who openly backs Mousavi, had been barred from leaving Iran. Rafsanjani's daughter Faezeh addressed Mousavi supporters on Tuesday. Hardline students called for her and her brother, Mehdi, to be arrested.

Diplomats said they see worrying signs that Iran is looking to falsely implicate western governments and Israel in the unrest. Iran's Intelligence Ministry said it uncovered a foreign-linked terrorist plot to plant bombs in mosques and crowded places in Tehran on election day.

The exiled former Iranian president, Abolhassan Bani-Sadr, predicted that the trouble would go on. "It is going to continue in one way or another," he said in Paris. "The conscience of this people has condemned the regime. That's quite certain and anyone can see it."

Pro-Mousavi protests have also been reported in the cities of Isfahan, Rasht, Orumiyeh, Zanjan and Zahedan.