Tehran, Iraq ? Iran’s beleaguered president conceded defeat Wednesday in his long struggle to reform a system stacked in favor of hard-line Islamic clerics, saying he was abandoning efforts to salvage two key bills that sought to expand presidential powers and limit the authority of an unelected conservative body.

Mohammad Khatami, once hailed as the leader of a hugely popular reform movement, warned Iranians not to expect too much from the presidency, accusing his rivals of relegating the office to a position of little influence.

Acknowledging the failure of the pillars of his presidency, Khatami conceded that two key reform proposals designed to check the powers of hard-liners were dead.

One of the bills sought to increase presidential powers in order to stop constitutional violations by conservative clerics. The other would have barred the hard-line oversight body, the Guardian Council, from disqualifying parliamentary and presidential candidates.

“I withdraw the bills and declare that I have met with defeat,” Khatami told reporters after a Cabinet meeting.

“Let the people know who is their president and what powers he has so that they keep their expectations accordingly,” said Khatami, whose second four-year term ends in June 2005.

Khatami lashed out at the Guardian Council, an unelected body that vets all legislation, as harming Iran’s theocracy, the product of the 1979 Islamic Revolution that toppled a Western-backed monarchy.

The Guardian Council rejected the parliament-approved bills about a year ago, saying they were unconstitutional and against Islam. Khatami acknowledged Wednesday there would be no breakthrough in working out acceptable legislation and said efforts to do so were finished.

“I am withdrawing (the presidential powers bill) so that the few powers that the president has now are not eliminated,” Khatami said.

In his seven years as president, Khatami has been at loggerheads with Islamic hard-liners who have clung to power despite their unpopularity.

Soon after his election, he surprised his opponents by engineering modest reforms that relaxed the country’s strict Islamic laws and allowed greater media freedoms.