"If Iranians cannot talk about their legitimate rights at peaceful gatherings and are instead suppressed, frustrations will build up which could possibly uproot the foundations of the government, no matter how powerful," the cleric said in a statement faxed to AFP.
It was the latest broadside fired off against the regime by Montazeri, who was once tipped to take over from the father of the revolution Ayatollah Ruhollah Khomeini but fell out with the late leader before his death.
Montazeri, now 85, also urged the authorities to set up an "impartial" committee with full power to find a solution to the worst crisis in the 30-year history of the Islamic republic.
"My recommendation to the great and dear Iranian nation is to pursue its logical and fair demands in complete calm," he added.
Tehran has been rocked by a wave of unrest since the result of the June 12 poll gave President Mahmoud Ahmadinejad a thumping victory over his main rival Mir Hossein Mousavi.
Last week Montazeri called on Iran?s young people to pursue peaceful demonstrations against the election result, which the opposition has charged was rigged to ensure victory for the hardline incumbent.
One of the main architects of the Islamic republic, Montazeri was a student and close ally of Khomeini. But he fell from grace in the late 1980s after he became too openly critical of political and cultural restrictions, most notably Iran's treatment of political prisoners and opposition groups.
Montazeri resigned months before Khomeini's death in 1989, and was told by Khomeini to stay out of politics and focus instead on teaching in the religious city of Qom.
Montazeri, considered by his followers to be the highest living authority of Shiite Islam in Iran, has also questioned the theological credentials of current supreme leader Ayatollah Ali Khamenei.
This was branded as treason, and in 1997 Montazeri was placed under house arrest for five years before being released under the presidency of Ahmadinejad's predecessor Mohammad Khatami.
Another top cleric Grand Ayatollah Nasser Makarem Shirazi said the election dispute must be resolved in a way that leaves no doubt in the minds of the people.
"The issue should be resolved in a way that turns suspicion into trust," he was quoted as saying by the Mehr news agency.
"I expect that when the dust settles, we come up with solutions to the issue in order to achieve national peace. I call upon all experts to solve the crisis."
