TEHRAN (Reuters) - A defeated candidate in Iran’s disputed election has said the Islamic system may face “collapse” unless it embraces change, in unusually blunt language from a prominent establishment figure.

Iranian protesters hold up placards that read, "Death to European racists" (L) and "Savage killing (remains) the European human rights logic" (3rd R) and a Iranian national flag during a protest gathering in front of the German embassy in Tehran July 11, 2009. REUTERS/Morteza Nikoubazl

Conservative Mohsen Rezaie, a former Revolutionary Guards commander who finished third in the June 12 vote won by hard-liner Mahmoud Ahmadinejad, called for national unity in a statement posted on his website on Sunday evening.

“Continuation of the current situation would lead us to collapse from inside,” he wrote. “We need cooperation and brotherhood. We need to respect people and their rights.”

The presidential election sparked days of street protests by supporters of moderate candidate Mirhossein Mousavi, who says the vote was rigged in Ahmadinejad’s favor, and exposed deepening divisions within the Islamic Republic’s leadership.

Mousavi has said the next government of Ahmadinejad would be illegitimate. The authorities reject opposition charges of vote fraud and Supreme Leader Ayatollah Ali Khamenei has upheld Ahmadinejad’s re-election for another four-year term.

In his statement, Rezaie criticized the way the election was handled as well as “mismanagement in dealing with public demands and protests,” in a clear reference to post-vote unrest, saying this had led to a crisis which the West could exploit.

The vote further strained ties between Iran and the West, which are also at odds over Tehran’s disputed nuclear ambitions.

Western powers have criticized a post-election crackdown on demonstrations and Iran has accused the United States and Britain in particular of interfering in its internal affairs.

State media say at least 20 people were killed as protesters clashed with riot police and members of the Basij militia. The authorities and Mousavi blame each other for the bloodshed. Hardliners have called for Mousavi to be put on trial.

Rights activists have said 2,000 people detained during the vote’s turbulent aftermath may still be held across Iran, including leading reformers, academics, journalists and students.

Rezaie, who initially filed formal complaints against the election but later withdrew them, stressed the need for unity within the Islamic state’s establishment.

“There is no other way but to have unity on the continuation of the Islamic revolution, in which some reforms on the political scene are needed,” Rezaie said.

“We would move in a wrong track if we can not give our seat to the others or if we can not let the others to participate in handling the country’s affairs,” he said.

Rezaie said Mousavi, Ahmadinejad and other politicians and political activists had no choice but “sitting next to each other for preservation of national interests.”

He added: “We need unity and people’s support if the government wants to get success in its nuclear negotiations with the big powers in the next months or to defend the country against a possible strike by Israel.”