Reformist President Mohammed Khatami is now seeking parliamentary approval for his nominated successor.

He is determined to ensure that the ministry cannot get involved in such a situation again.

BBC Tehran Correspondent Jim Muir says it would be a significant advantage for the president's supporters if he succeeded in reforming the ministry - currently controlled by his conservative opponents.

He is said to be trying to bring the all pervasive and much feared intelligence apparatus into line with his concepts of transparency, accountability and the rule of law.

President Khatami accepted the resignation of the Intelligence Minister, Qorbanali Dorri Najafabadi, following an investigation into the involvement of ministry agents in the killing.

"After serving at the intelligence ministry for one and a half years ... you have decided to resign and stop your co-operation with the government at that ministry," said a statement from the president.

The resignation follows mounting pressure from the president's supporters attacking the ministry.

The minister had resisted repeated calls to step down following the revelations and had been supported by conservative officials.

The president's nomination for the new minister is believed to be Ali Younesi, a senior official with long experience in the judicial and security fields.

He was also one of three members of the team which investigated the murders. Officials close to Mr Khatami say the president has reached agreement with Mr Younesi on the future role of the Intelligence Ministry.