The largest pro-reform party in Iran, the Islamic Participation Front, has said it will not take part in the parliamentary elections on 20 February.
Leader Mohammad Reza Khatami is among the banned candidates
The party leader, Mohammad Reza Khatami, said it had lost hope that the elections would be free and fair.
It follows protracted arguments about the banning of reformist candidates by the conservative vetting body.
The Guardians Council had already barred nearly all of the Islamic Participation Front's candidates.
Mr Khatami, who is also the deputy speaker of parliament and brother of Iran's
pro-reform President Mohammad Khatami, is among those barred from the poll.
"We have no hope that a fair, free and legitimate election can be held on 20 February. So in the current circumstances we cannot participate," Mr Khatami said.
He said the party would only put forward candidates for an election if the candidate bans were overturned and the vote was postponed to allow more time for campaigning.
He also said the party was not calling on voters to boycott the polls, adding that it was "their sovereign choice".
IRAN'S REINS OF POWER
Supreme leader Ayatollah Ali Khamenei: Appointed for life, overrides all other authorities (pictured above)
Guardians Council: Half chosen by Khamenei, responsible for vetting election candidates and laws
President Mohammad Khatami: Elected for four years, power can be circumscribed by clerics
Parliament: 290 members introduce and pass laws, subject to approval
Correspondents say that without the Participation Front, hardline candidates are likely to step uncontested into enough seats to re-take control of parliament.
Reformists have controlled parliament since 2000, using it as a platform to press for social and political reforms.
On Sunday, more than 100 Iranian MPs resigned in protest at the barring of thousands of candidates in the election.
The Guardians Council - a 12-member unelected body - on Friday reinstated a third of the 3,600 candidates it disqualified from the election. But it falls far short of the full reinstatement demanded by protesting reformist MPs, 80 of whom are themselves on the blacklist.