Iran's President Hassan Rouhani said Sunday that government bodies must provide "space for criticism" as he sought to head off days of unrest, but also warned protesters that violence was unacceptable.
Hundreds of protesters marched through Tehran and other cities in a fourth day of demonstrations as authorities cut access to social media.
Rouhani finally broke his silence on the protests that mark the biggest test for the regime since mass protests in 2009.
They began as demonstrations against economic conditions in second city Mashhad on Thursday, but quickly turned against the Islamic regime as a whole with thousands marching in towns across Iran amid chants of "Death to the dictator".
"The people are absolutely free in expressing their criticisms and even protests," Rouhani said at a cabinet meeting, according to the state broadcaster.
"But criticism is different to violence and destroying public property."
He sought a conciliatory tone, saying that government bodies "should provide space for legal criticism and protest" and calling for greater transparency and a more balanced media.
US President Donald Trump said the "big protests" showed people "were getting wise as to how their money and wealth is being stolen and squandered on terrorism".
"Looks like they will not take it any longer," he wrote on Twitter, warning that Washington is "watching very closely for human rights violations!"
Rouhani dismissed Trump's comments, saying: "This man who today in America wants to sympathise with our people has forgotten that a few months ago he called the nation of Iran terrorist."
It followed reports that 200 people had been arrested in the previous night's unrest in Tehran and officials confirmed two people had been killed in the small western town of Dorud.
In an apparent attempt to stave off more unrest, the authorities began blocking access to photo sharing and online messaging services on mobile phones, including Telegram, which the government accused of being used to foment violence, local media and Telegram's CEO said.
Conservative news agency Fars said Tehran shops had closed on Sunday "for fear of damage to their shops by rioters".
After initial silence, state media has shown footage of unrest, focusing on young men violently targeting banks and vehicles, an attack on a town hall in Tehran, and images of a man burning the Iranian flag.
"Those who damage public property, disrupt order and break the law must be responsible for their behaviour and pay the price," Interior Minister Abdolrahman Rahmani Fazli said on state television.
"The spreading of violence, fear and terror will definitely be confronted," he added.
There have been reminders of the continued support for the regime among conservative sections of society, with pro-regime students holding another day of demonstrations at the University of Tehran.
They had outnumbered protesters at the university on Saturday.
Rouhani came to power in 2013 promising to mend the economy and ease social tensions, but anger over high living costs and a 12-percent unemployment rate have left many feeling that progress is too slow.
Unemployment is particularly high among young people, who have grown up in a less restrictive environment and are generally considered less deferential to authority.
"Rouhani has run an austerity budget since 2013 with the idea that it's a tough but necessary pill to swallow to manage inflation and currency problems and try to improve Iran's attractiveness for investment," said Esfandyar Batmanghelidj, founder of the Europe-Iran Forum.
"But choosing years of austerity immediately after a very tough period of sanctions is bound to test people's patience," he told AFP.
The total number of arrests from the protests around the country remained unclear.
An official in Arak, around 300 kilometres (190 miles) southwest of Tehran, said 80 people had been detained there overnight.
Police have so far taken a relatively soft approach to the unrest. They deny shooting the two men killed in Dorud, and information has been hard to obtain amid a near-total media blackout.
The authorities have blamed external forces for fomenting violence, saying the majority of social media reports were emanating from regional rival Saudi Arabia or exile groups based in Europe.
Since the ruthless repression of the 2009 protests against a disputed presidential election that gave hardliner Mahmoud Ahmadinejad a second term, many middle-class Iranians have abandoned hope of securing change from the streets.
But low-level strikes and demonstrations have continued, with groups such as bus drivers, teachers and factory workers regularly protesting against unpaid wages and poor conditions.