A war is brewing between Iran and Google, culminating in the complete shutdown of the Internet behemoth's Gmail service -- and the country's announcement of plans to create a first-of-its-kind national e-mail service, a local journalist says.

The Gmail shutdown -- and a clampdown on Internet access overall -- comes amid widespread demonstrations against the Iranian government surrounding Thursday's 31st anniversary of the Islamic Revolution. Iran blocked access to the Internet in December ahead of protests on National Students Day, as well.

A local journalist, whose identity is being withheld for his protection, told FoxNews.com that the Iranian government has been angrily eyeing Google for the eight months, since the company's June 18 launch of Google Farsi -- a site that translates Web pages from English into Persian, making the entire Internet available to Iranians.

"Since June, when they launched Google Farsi, the authorities have been furious," the journalist told FoxNews.com. And now Iran is taking on Google openly. Saeed Mahdyun, a telecommunications official, told the semiofficial ILNA news agency on Wednesday that Gmail would be blocked, and users will be encouraged to switch to local e-mail services.

"There's a war going on between the [state-owned Telecommunication Company of Iran (TCI)] and Google, and Iran is getting more and more unhappy about what Google is doing," the journalist told FoxNews.com.

"Gmail is completely shut down. Google is on and off, and Hotmail, Yahoo and all the major e-mail accounts have been shut down," he told FoxNews. "The Internet is extremely slow in Tehran; north of Tehran it has been shut down completely. West of Tehran we can still send out reports to the outside world, but it's extremely slow."

Google has confirmed the Gmail block, telling FoxNews.com that "we have heard from users in Iran that they are having trouble accessing Gmail. We can confirm a sharp drop in traffic, and we have looked at our own networks and found that they are working properly."

"We strongly believe that people everywhere should have the ability to communicate freely online. Sadly, sometimes it is not within our control," a company spokesman said. He would not comment on overall relations with Iran.

The face-off echoes the ongoing standoff between Google and China over censorship in that nation.

On Jan 12, David Drummond, Google's chief legal officer, announced "a new approach to China" on the company's blog. Following the detection of cyberattacks intended to access the Gmail accounts of Chinese human rights activists, and the ongoing censorship in the country, Drummond wrote that Google would "review the feasibility of our business operations in China."

"We have decided we are no longer willing to continue censoring our results on Google.cn, and so over the next few weeks we will be discussing with the Chinese government the basis on which we could operate an unfiltered search engine within the law, if at all. We recognize that this may well mean having to shut down Google.cn, and potentially our offices in China."

Meanwhile, a spokesman for Microsoft said that the company is actively investigating the situation, but had no immediate comment on the company's position regarding Iran. Following Google's announcement of plans to withdraw from China, Microsoft stated that its search engine, Bing, and other company software and services would remain in the country and would continue to comply with censorship demands.

On Wednesday the State Department criticized Iran over the restrictions it has placed on the Internet.

"While information technologies are enabling people around the world to communicate like never before, the Iranian government seems determined to deny its citizens access to information, the ability to express themselves freely, network and share ideas," said State Department spokesman P.J. Crowley.

"Virtual walls won't work in the 21st century any better than physical walls worked in the 20th century. The Iranian people are dynamic and determined and will find a way to overcome the obstacles the Iranian government puts in their way."