The latest street unrest after Iran's disputed June 12 presidential vote took place near the offices of the Etemad-e Melli, the daily of leading pro-reform cleric Mehdi Karoubi.
Karoubi angered many hardliners last week by saying some post-election protesters had been raped in jail. His party said on Monday that the paper had been temporarily shut down, and the prosecutor's office later confirmed this.
"In accordance with the law ... the Etemad-e Melli newspaper belonging to Mr Karoubi has been suspended until further notice," an official statement carried by the semi-official Mehr News Agency said, without giving a reason.
Although the security forces quelled the mass demonstrations that erupted after the vote, backers of defeated moderate candidates have defied the authorities by staging several smaller rallies over the last month.
The witness said he had seen police beat two young men who were in one of several smaller groups of protesters moving around in the streets near the Etemad-e Melli building, chanting anti-government slogans.
The witness, who declined to be named, said he had seen one demonstrator being arrested and put into a police car. The authorities say such street protests are illegal.
Earlier, police prevented demonstrators from gathering outside the Etemad-e Melli offices, where the witness said he saw scores of police and police vehicles.
"They tried to gather in front of the building but police did not let them and told them to leave," the witness said.
About 400 protesters at one stage gathered a few hundred metres away, chanting "death to the dictator", "where are our votes", "independence, freedom, Iranian republic", he said.
Karoubi came fourth in the election, but he and the moderate runner-up, Mirhossein Mousavi, say it was rigged to secure hardline President Mahmoud Ahmadinejad's re-election. Ahmadinejad and his allies deny it.
Ahmadinejad has until Wednesday to present a cabinet to parliament for approval but may get a rough ride from the conservatives who dominate the assembly, as well as from his moderate foes who see his next government as illegitimate.
In an apparent bid to shore up his support among women, Ahmadinejad said on Sunday his next government would include at least three female ministers. It would be the first time women had held ministerial positions in the Islamic Republic.
Karoubi and Mousavi campaigned on the need to improve the position of women in Iran. Rights activists say Iranian women face institutionalised discrimination, for example in laws relating to divorce and child custody.
Ahmadinejad has yet to say who will head the oil ministry, one of the most important cabinet positions as crude sales account for most state revenue in a country which is under U.S. and U.N. sanctions over its disputed nuclear programme.
Thousands were arrested after the election, in Iran's worst street unrest since the revolution three decades ago, but the authorities have rejected as "baseless" Karoubi's allegations that some male and female detainees were raped.
Some hardliners have called for him to be arrested or tried if he failed to prove his allegations were true. Karoubi says he has evidence of mistreatment of detainees. Last Thursday, he said some of those arrested were killed under torture.
Etemad-e Melli's managing editor, Mohammad-Javad Haqshenas, said the paper was closed late on Sunday because it planned to publish a statement by Karoubi on its front page on Monday.
In the statement, carried by the party's website, Karoubi responded to "insults" against him by his hardline opponents and said he would not be silenced.
The labour news agency ILNA quoted an unnamed judiciary official as saying the paper had continued to publish material contrary to the law despite an "abundance of complaints, court warnings and repeated summons to the court."
At least 200 people remain in jail, including senior moderate politicians, activists, lawyers and journalists. Iran has this month staged three mass trials of detainees.
One of those put on trial, French teaching assistant Clotilde Reiss, has been freed on bail, President Nicolas Sarkozy's office said in a statement on Sunday.
Tehran prosecutor Saeed Mortazavi said Reiss's bail was set at about $300,000, and that the investigation had been concluded, media reported. Reiss, detained in early July, has been charged with aiding a Western plot against the Iranian government after the vote.
