Parliament this month passed a state budget for the next Iranian year starting March 21 that did not contain radical cuts in subsidies sought by Ahmadinejad.
Delegates had said the cuts could stoke inflation, while analysts say they could also provoke unrest in a country already plagued by tension after street protests by opponents of Ahmadinejad over the past year.
"The solution is to ask people if they want this law to be implemented or not and to hold a referendum on this issue," Ahmadinejad said in an interview on state television on Friday evening and carried on state news agency IRNA. "We should not require the government to do something that hurts people. The government would not do anything that hurts the people."
The government proposed saving $40 billion by reforming the Islamic republic's costly subsidy system but parliament only approved half of that amount. The Guardian Council signed off the budget last week.
Parliament first stymied the government's subsidy reform plans last year by approving the general outlines but linking the plan to the state budget to enforce parliamentary oversight of how the money saved is spent.
Analysts say Ahmadinejad hopes the subsidy cut will make Iran less vulnerable to any U.N. sanctions on its gasoline imports and it would allow the president to channel some of the cash saved directly to constituents who support him.
Iran is the world's fifth-largest crude exporter. But while oil prices have surged, Iran's economy has slowed as a result of the global economic downturn, political isolation and sanctions over its nuclear energy programme. (Reporting by Andrew Hammond)
