Former President Mohammad Khatami has given the strongest signal so far that he will run in Iran's June presidential election, telling supporters he should "fulfill my promises" about announcing his candidacy.

Khatami, who served from 1997 to 2005, oversaw a thawing in Iran's ties with the West. Those relations have since sharply deteriorated under President Mahmoud Ahmadinejad, who an aide said last week was seeking a second four-year term.

"I should fulfill my promises made to (Iran's) people and announce my readiness (to run) despite my personal wish," Khatami said in the remarks sent to Reuters on Wednesday.

A close Khatami ally, Mohammad Ali Abtahi, told Reuters on Wednesday that the former president would make an official announcement about his candidacy in the coming days.

Khatami's comments were made in a meeting with youth groups. He previously said he was considering whether to stand and has said either he or another pre-reform politician, former Prime Minister Mirhossein Mousavi, will run.

"Sometimes a human being has to make decisions that are against his will," he said, echoing his teary declaration in 2001 when Khatami said he would seek a second term despite his personal reluctance.

If he declares, Khatami will also compete against another pro-reform candidate, Mehdi Karoubi, a former parliament speaker who failed in his 2005 presidential bid.

"Mr Karoubi and I have many common points and we both want improvement for Iran and the Iranian nation. I believe neither of us will stand in each other's way," Khatami said.

U.S. President Barack Obama has offered a new approach to Iran, which has not had relations with Washington for three decades, saying he would extend a hand of peace if the Islamic Republic "unclenched its fist".

Diplomats have said it is a rare opportunity to end a rift that began with the 1979 Islamic revolution.

Any decision on relations with Washington will ultimately be taken by Supreme Leader Ayatollah Ali Khamenei, who has the final say in policy and who has publicly supported the work of Ahmadinejad and his government.

But Khamenei tends to seek consensus among Iran's ruling elite, analysts say, and the election result could influence the direction of any debate in Iran.