"The compromise has failed," deputy speaker Mohammad Reza Khatami, among those the Guardian Council has disqualified from seeking re-election, told reporters.
Khatami said his Islamic Iran Participation Front, the country's largest reform group, would maintain its boycott of the Feb. 20 parliamentary elections.
"The previous trend has continued," he said. "The Feb. 20 elections will not be legal and free. My party will not participate in this election."
Meanwhile, reformist lawmakers ended a 26-day sit-in to protest disqualifications, declaring that they too would boycott the elections.
"Given the fact that no fundamental changes have occurred in overturning the illegal disqualifications, we, the lawmakers, declare with regret that will not participate in the Feb. 20 vote because it's illegal, unfair and not free," the lawmakers said in a statement made available to journalists.
Without major reformist parties, voter turnout will likely be low and hard-line candidates could easily retake control of parliament.
The Guardian Council, which is appointed by Khamenei, disqualified more than 2,400 reformist lawmakers and politicians from the elections, and all attempts by reformists to reach a compromise failed.
Mohsen Mirdamadi, another disqualified lawmaker, said Thursday that the Intelligence Ministry was told to provide a list of over 600 approved candidates to the Guardian Council "as a legal formality," and the council was to forward that list to the Interior Ministry "without any intervention."
But despite that order from Khamenei, the Guardian Council looked over the list and approved only 51 of the 600, said Mirdamadi, head of parliament's National Security and Foreign Policy Committee.
"Against the leader's order, the Guardian Council has interfered. This is part of the council's strange interpretation of the order," Mirdamadi told The Associated Press.
The boycott announcement by lawmakers puts President Khatami in a difficult position.
Khamenei, the supreme leader, said Wednesday that the elections must be held on the scheduled date and warned that he would not tolerate the resignation of government officials.
"No one is allowed to refuse to carry out his legal responsibilities because of his opposition," Khamenei said, referring to the provincial governors who have said they won't hold sham elections. "Avoiding one's responsibilities by way of resignation, or other forms, is illegal and religiously forbidden."
Khatami, however, has told the nation that his government "will hold only competitive, free and fair elections."
Mohammad Reza Khatami, the deputy speaker, said the president informed Khamenei of the compromise's failure.
failure damages the whole country, not a particular group. The next parliament
won't be democratic, but it doesn't mean that democracy has totally failed in
Reformists won the parliament in 2000 for the first time since the 1979 Islamic Revolution, and used it as a platform to press for social and political reforms.