(Reuters) - Iran´s parliamentary election this Friday is a potentially decisive battle in the struggle between political and religious hardliners, but it is unlikely to alter Tehran´s stand on its deadlock with the West over its nuclear program.

It will be the first poll since the country´s disputed presidential election in 2009, which led to eight months of bloody street protests by Iranians demanding reform.

The ballot takes place as the dispute with the West over Iran´s nuclear program is growing alongside concerns that Israel might attack it over suspicions of developing atomic weapons. Tehran says the nuclear work it to generate power.

With leading reformists snubbing the vote and with the outcome unlikely to force a nuclear re-think, its main significance is the contest between two rival hardline factions, loyalists to Supreme Leader Ayatollah Ali Khamenei and President Mahmoud Ahmadinejad.

"Both sides have put their fingers on the triggers and are ready to fire. They will lay their guns on the ground if they reach a compromise," political analyst Hamid Farahvashian said.

The result will demonstrate which camp is stronger and will have a bearing on a presidential election next year.

The clerical establishment needs a high turnout to show its legitimacy and popularity, badly damaged after the 2009 election and ensuing anti-government unrest.

"Not leaving anything to chance, Khamenei loyalists need a majority in parliament to obstruct the likely chances of Ahmadinejad´s allies winning the 2013 vote," Farahvashian said.

A critical assembly could weaken Ahmadinejad and his supporters for the rest of his term, he said.

Analysts say Khamenei supporters are sure to win the majority as he has around 20 million backers around the country.

"My prediction is that we will have an assembly dominated by Khamenei loyalists and a minority made up of Ahmadinejad supporters," political analyst Babak Sadeghi said.

HEIRARCHY CHALLENGED

Supporters of both leaders portray their leaders as the most capable of defending the legacy of the late Ayatollah Ruhollah Khomeini, the father of the 1979 Islamic revolution that toppled the U.S.-backed Shah.

The struggle began when Ahmadinejad tried to supersede Khamenei in Iran´s complex political hierarchy in which the Supreme Leader has held total authority since the founding of the Islamic Republic. Khamenei is Iran´s second Supreme Leader.

Since Ahmadinejad´s re-election to a second term in 2009, which Khamenei initially endorsed, the growing influence of his circle has alarmed the Supreme Leader and his supporters.

Khamenei loyalists accuse Ahmadinejad of trying to undermine his position by involving himself in theocratic issues, traditionally the Supreme Leader´s own preserve.

An alliance of establishment groups - the Revolutionary Guards, powerful clerics, influential merchants and hardline politicians - have united to block Ahmadinejad´s allies from winning the vote.

Dozens of Ahmadinejad allies have been detained or dismissed from their posts for being linked to a "deviant current" that his rivals say aims to weaken the role of the clergy.

"For the Supreme Leader, preserving the integrity of the clerical establishment is of utmost concern," said a relative of

Khamenei, who asked not to be named.

The volume of verbal threats has also increased against Ahmadinejad, with Khamenei threatening to eliminate the position of president.

But Ahmadinejad has ways to fight back. The interior ministry, in charge of conducting the elections, can declare the results null and void, analysts say.

Whatever the outcome, real power on vital issues such as Iran´s nuclear program and relations with the United States remains solely in the hands of the Supreme Leader.

SURVIVAL

Some argue that the establishment ultimately needs Ahmadinejad to survive, particularly when Iran is under international pressure over its nuclear activities and faces a tightening web of sanctions and threats of U.S. or Israeli military action against its nuclear sites.

"His dismissal could increase pressure on Iran and also encourage the opposition to take to the streets. It will weaken the establishment," political analyst Sadeghi said.

Meanwhile, Western sanctions aimed at forcing Iran to make concessions on the nuclear issue have started to hurt energy and food imports. Many Iranians blame Ahmadinejad´s policies for soaring prices.

Rivals say he has left Iran internationally isolated and a victory for his camp would bring more pressure on the economy.

Critics say cuts in food and fuel subsidies, replaced by direct monthly payments of around $38 per person since 2010, have fuelled inflation, officially running at around 21 percent.

Concerned by economic difficulties, many Iranians are hesitant to vote for candidates allied to the president.

"I can no longer afford my family´s expenses. Even the price of bread has tripled. Ahmadinejad promised to bring the oil money to our tables but instead he has taken away even bread," said teacher Reza, 57, a father of three.

The son of a blacksmith whose humble image still scores well with Iran´s poor masses, Ahmadinejad still enjoys support in small towns and villages in Iran, particularly because of his handouts of petrodollars.

But his image has been tainted by the country´s biggest banking scandal, which was made public with Khamenei´s approval.

Some politicians have linked Ahmadinejad´s close advisers to the lead suspect in the $2.6 billion scam, claiming part of the money had been earmarked for the election campaign of Ahmadinejad allies. He denies any government wrongdoing.

"I voted for Ahmadinejad in 2009 because I thought he was decent. But with this fraud I will not trust any politician again and I will not vote," said shop-keeper Habib, 28, in the central town of Damavand.

The election is unlikely to herald a change in fortune for the reform movement.

Pro-reform political parties have been banned since the 2009 election, which the opposition says was rigged.

Opposition leaders Mirhossein Mousavi and Mehdi Karoubi, have been under house arrest since February 2011 and many reformists have either been jailed or banned from political activities.

Iranian authorities, while publicly hailing the Arab Spring revolts, are concerned that they could spill into Iran and have warned against any revival of the unrest of 2009. (Editing by Angus MacSwan) (© Thomson Reuters 2012. 02/28/12)