Witnesses said the first bomb to rock the city -- dominated by ethnic minority Arabs and capital of oil-rich Khuzestan province -- was in front of a private bank and busy commercial area, while the second was in front of a government building.

The latest toll was eight dead and 46 injured, local hospital director Mansoor Soltanzadeh told official media.

"The president had been scheduled to give a speech this morning in Ahvaz, although the bombs did not explode in the same place where the speech was scheduled to have been delivered," an aide to the president told AFP.

"President Ahmadinejad's visit to the province was cancelled yesterday (Monday) afternoon because of bad weather."

Situated close to the border with British-controlled southern Iraq, Ahvaz has been hit by a wave of insecurity over the past year, including ethnic riots in April 2005 and a string of car bombings prior to Iran's presidential election last June when Ahmadinejad scored a shock victory.

In October another double bombing in Ahvaz killed six people and wounded more than 100, while at the same time several pipeline blasts were reported with sabotage reportedly suspected in at least one of those incidents.

"We think this is by the same movements who were behind the previous incidents. Most of them had been arrested but there were a few on the run," Ahvaz governor Mohammad Jafar Sarami told AFP.

Interior Minister Mostafa Pour-Mohammadi also said the attacks were "directed from abroad", but stopped short of repeating past allegations that Britain -- which has troops across in Iraq -- was trying to destabilise the area.

Nursing a bandaged head, bank manager Samad Tavakoli described a "huge bang" outside his now totally destroyed branch.

"We had a lot of customers in the bank, there was a sudden power cut and then an explosion. It was a really huge bang. All of my 15 employees were injured, and one lost her leg," he said.

"I thought the city had been hit by a rocket," said Meysam Nourian, an office worker. "I went into the street and saw smoke, burned bodies. It was a horrific sight."

Inside an Ahvaz hospital, injured 27-year-old bank worker who gave his name as Ali lashed out at "godless people" and "foreign agents".

"I was sitting and filling out forms, and suddenly I was knocked out. There was a huge shockwave," he said.

Britain has consistently denied being behind the unrest and insecurity in the area or aiding ethnic Arab separatists.

Arabs are said to represent three percent of Iran's population of 69 million, who are mainly Farsi speaking, but they are believed to make up close to 50 percent of Khuzestan's population.

The Khuzestan region was devastated during the Iran-Iraq war between 1980 and 1988, and many residents of the area have complained of continued poverty and a lack of job opportunities despite the province's huge oil reserves.

The rioting last April was also sparked by a forged official letter saying Tehran wanted to change the province's ethnic makeup.

In October 2005, Foreign Minister Manouchehr Mottaki said the clerical regime had proof of British meddling.

"The information shows that Britain is seeking to create insecurity in our country by interfering in our internal affairs," Mottaki said at the time, also warning that the consequences "could be worrying for the British."

The allegations came amid a wider deterioration of relations between Tehran and London over alleged Iranian meddling in Iraq and the Islamic republic's disputed nuclear programme.