It was meant to be an event when Iranians unite to honour one of Shia Islam's most revered martyrs. Instead, it turned into a day of bloodshed that left at least nine people dead, many more injured and the country facing a potentially unbridgeable political divide amid an escalating cycle of violence.

The Shia mourning ceremony of Ashura became a confrontation between Iran's torn political factions when the government unleashed a furious crackdown on pro-opposition protesters that included orders to open fire.

Witnesses were still reporting the sounds of gunfire in Tehran last night after a day in which at least five protesters in the city were killed and many more injured in the most violent clashes between opposition supporters and security forces in months. Four more were killed in the northern city of Tabriz, a stronghold of the reformist leader, Mir Hossein Mousavi, whose nephew was among those reportedly shot dead in Tehran.

More than 300 arrests were confirmed, amid reports of violent clashes in cities and towns across Iran.

In a departure from previous incidents, opposition demonstrators retaliated furiously against the security forces. Eyewitnesses described how many officers were attacked and stripped of their uniforms and beaten with their own batons. A video posted on YouTube showed one security agent being surrounded by an angry crowd while other footage showed a police officer with a bloody head wound after being mobbed.

Plumes of smoke billowed above Tehran after numerous police cars and motorcycles were set ablaze, and the city's main boulevards were covered in stones that had been used as missiles.

Security forces opened fire on demonstrators gathered in some of the city centre's main squares and thoroughfares after failing to disperse crowds with tear-gas and warning shots.

"When people started attacking them, the forces were ordered to kneel, take aim and shoot at people directly," said one witness, Muhammad, 25, an economics student. "We were on Kolaj bridge and people started attacking. The security forces began shooting at people. I saw one guy with his brains blown out."

The clashes came after Iran's opposition Green Movement decided to use Ashura – commemorating the killing of Imam Hussein, grandson of the Prophet Muhammad, at Kerbala in 680AD – as a pretext for demonstrations.

Officials had warned that any show of defiance would be met with a severe crackdown and put hospitals and emergency services on alert for major casualties.

Many of those injured in the clashes were not taken to hospital for fear that the security forces would arrest them there.

By authorising the use of lethal force on one of Shia Islam's holiest days, the Islamic regime may have fatally undermined its claim to be the protector of Iran's religious traditions. Islamic teaching deems warfare and spilling blood to be haram, or forbidden, during the current Islamic month of Muharram.

The deaths also pave the way for a cycle of mourning ceremonies which look likely to lead to further violence. A similar succession of mourning events undermined the Shah's regime in 1978 and led to the Islamic revolution.

Police described the deaths as suspicious and denied that orders had been given to open fire. Iran's deputy police chief, Ahmad Reza Radan, said only one person had been shot, but not by police. Two others had died in a car accident while another fell off a bridge, he claimed.

The reformist website Rah-e Sabz, citing eyewitnesses, reported that some members of the security forces had mutinied and argued fiercely with their commanders over the shooting orders. One was said to have been slapped by his commander and threatened with a military tribunal after telling him: "I will never kill my compatriots."

The shootings threaten to further undermine the standing of Iran's supreme leader, Ayatollah Ali Khamenei, who had already replaced President Mahmoud Ahmadinejad as the target of the opposition's wrath.

Protesters yesterday chanted: "Khamenei is a murderer, his leadership is illegitimate." Equally damaging were slogans that tied him to the rape allegations levelled by opposition activists, who say they were subject to brutal sexual assaults in prison after being detained in the wake of last June's bitterly disputed presidential election, won by Ahmadinejad.

Hossein Bastani, an Iranian political analyst based in France, said yesterday's events had driven the Islamic regime closer to collapse. "Everybody is now convinced that the Islamic regime cannot continue like this," he said. "I think we will see a very important change in the political system of Iran. Nobody can say when, whether it will be in two weeks, two months or one year. But everyone knows this regime is far weaker than to be able to survive. Because of the behaviour of Khamenei and Ahmadinejad, most Iranians are now in favour of some sort of regime change."

The semi-official news agency Fars, closely linked to the revolutionary guards, said the clashes had been caused by Mousavi's supporters, who had "followed the call of the foreign media". It accused "deceived hooligans" of setting fire to the Qur'an and "disrespecting" Ashura.

Voices from the street: Protesters' stories

Mohammad, 25, economic student, who was at Kalaj bridge:

"I witnessed three people being killed. The security forces were beating people like dogs. The forces were ordered to kneel and aim and shoot at people directly. We were Kolaj bridge and people started attacking.

The security forces began shooting at people. I saw one of them, his brain was blown out. People started chanting: 'I kill, I kill, the one who killed my brother.' People for the first time are defending themselves by throwing stones and also with batons. People have been attacking them bare-handed. The plain-clothed agents are grasping pieces of metal sticks and beating people on the head."

Ali Reza, 23, computer engineering student at Tehran Azad University, who was at Ferdowsi Square:

"In Azadi Street close to Eskandari Street people are attacking the forces. Most of the slogans have been against Khamenei rather than Ahmadineiad. In Imam Hossein Square, people set fire to the forces' motorcycles and ripped off the clothes of the revolutionary guard. One basiji, who was carrying a dagger in Azadi Street, was severely injured when people attacked him. In Laleh Park, 50,000 people had gathered. Around 50 or 60 of the security forces were 'arrested' by people and had their clothes ripped off. The forces are aiming at the upper part of people's bodies."