Iran's parliament voted on Tuesday against removing the economy minister of hardline President Mahoud Ahmadinejad from office over the country's biggest financial scandal.

Parliamentarians who wanted to remove Shamseddin Hosseini lambasted him for mismanagement, including laxity in monitoring the banking sector.

141 of the 244 parliamentarians present voted against unseating the minister, said parliament speaker Ali Larijani, a political rival to Ahmadinejad. A simple majority in the 290-seat assembly is enough to remove a minister from office.

The $2.6 billion banking scandal has taken on political dimensions because some hardliners linked the main suspect in the fraud to a so-called deviant current of advisers, allegedly led by Ahmadinejad's chief of staff and closest ally.

Esfandiar Rahim Mashaie is accused by many Shi'ite clerics and politicians of trying to undermine the central role of the clergy in politics by emphasising the nationalist strain of Iranian history and culture.

The conservative-dominated parliament has given Ahmadinejad a hard time since his re-election in 2009 by rejecting many of his nominees for key ministries and also by obstructing the government's proposed bills, including a cash subsidy plan on fuel and energy. The bill was passed and implemented in 2010.

Larijani called on lawmakers to give Hosseini another chance after he repeatedly apologised for his shortcomings during a speech defending his actions.

I urge you to give the minister a conditional vote of confidence ... Unseating Hosseini could intensify tension between the parliament and the government, Larijani told MPs.

The power struggle between the president and ruling hierarchy followed the 2009 election that the opposition says was rigged to secure Ahmadinejad's victory. Officials deny this.

MONEY FOR CAMPAIGN

Ahmadinejad's allies said the impeachment proceeding was politically motivated to weaken the president who has called his government the cleanest in the country's history.

We are against corruption ... The MPs' sensitivity over this incident is appreciated ... but shortcomings can happen anywhere in the system. We should unite to overcome them, Ahmadinejad told parliament when defending his minister.

Politicians, including lawmakers, accuse the deviant current of planning to use some of the stolen money to fund the 2012 parliamentary election campaign.

Critics believe Ahmadinejad was grooming Mashaie to succeed him in the 2013 presidential vote.

A pro-reform former official said Ahmadinejad's hardline rivals, including politicians and the clerical elites, want to clip his wings to make him a lame duck president in the remaining part of his term.

In a speech last month, Supreme Leader Ayatollah Ali Khamenei touched on the possibility of eliminating the position of president. Since April, Ahmadinejad's allies have been dismissed, detained and banned from holding office on various grounds.

At least 74 MPs last week demanded Ahmadinejad be summoned to face questions over his economic policies. Attempts by the parliament to impeach Ahmadinejad have been blocked by Khamenei's interventions.

(Additional reporting by Mitra Amiri and Hashem Kalantari; Writing by Parisa Hafezi; Editing by Robert Woodward)