President Khatami has been hoping for a high turnout

More than 200,000 candidates, including 5,000 women, are standing for about 180,000 seats throughout the country.

Polls closed late on Friday after they were extended six hours to allow more people to vote.

Analysts have predicted a low turnout, blaming voter apathy and frustration over the pace of reform.

Interior Minister Abdolvahed Mussavi-Lari estimated voter turnout could exceed 60% but said that in the capital Tehran, "traditionally, electors vote less".

Final results are not expected before Sunday.

Recent elections in Iran have been regarded as a test of strength between reformists and hardliners.

But as public frustration over the pace of reform grows, this poll is being seen as a kind of referendum on the popularity of the president and his programme of peaceful and legal reform.

Liberal candidates

It is the second time elections of these type have taken place. They were introduced in 1999 as part of President Khatami's concept of a civil society at the grassroots level.

After casting his vote in the capital, the president called on all Iranians to take part, saying they were the basis of democracy.

Unlike presidential and parliamentary elections, candidates are not screened by the conservative dominated guardian council. Instead, they are approved by an election board at the interior ministry, now dominated by reformers.

This year a wider pool of names were admitted in the ballot, including several liberal dissidents from the liberal opposition Iran Freedom Movement, which was banned by a court last July.

But correspondents say that might not be enough to encourage people to take part.

Many of the estimated 41 million eligible voters are under the age of 30. They feel disillusioned at the rate of change and believe that by taking part means an acceptance of the system, something which many are now no longer prepared to do.

Some conservative groups have called on their followers to stay away hoping to show that Mr Khatami's policies have failed.