TEHRAN - Former Iranian nuclear negotiator Hossein Mousavian has been found guilty of "propaganda against the system" but acquitted of an espionage charge that could have carried the death penalty, a judiciary official said on Tuesday.

The Mousavian case has taken on a political dimension because of a dispute about how to handle Iran's atomic row with the West. Some favour the moderate line adopted by the nuclear team when Mousavian was in office and others back President Mahmoud Ahmadinejad's tougher approach.

Judiciary spokesman Alireza Jamshidi, quoted by the official IRNA news agency, said: "Mousavian has been acquitted of two charges of espionage and holding on to classified information. The judge found him guilty of the accusation of propaganda against the system after the investigations."

Few details have been released. Mousavian was detained for few days in May, then freed on bail; but media said documents and his computer were kept by the authorities for the inquiry.

Western nations accuse Iran of seeking to develop nuclear weapons, a charge Tehran denies. Iran has faced two rounds of U.N. sanctions for refusing to heed demands to halt uranium enrichment, a process with both civilian and military uses.

The nuclear team when Mousavian was in office suspended enrichment work. Ahmadinejad has vowed no retreat and has denounced those advocating a return to suspension as "traitors".

Ultimately, decisions on nuclear policy and other matters of state are decided by Supreme Leader Ayatollah Ali Khamenei, who has the final say under Iran's system of clerical rule.

OPPOSING CAMPS

A judiciary official confirmed the report to Reuters. He said the prosecutor could appeal the decision to drop two of the charges. The report did not mention any sentence for Mousavian.

The spokesman for Ahmadinejad's government, Gholamhossein Elham, earlier on Tuesday called for an open trial in the case -- although he did not mention Mousavian by name.

"Everything could be cleared by holding an open trial ... and an open trial would remove the public's concerns," Elham told reporters, IRNA reported.

Intelligence Minister Gholamhossein Mohseni-Ejei accused Mousavian earlier this month of passing information to foreign countries including Britain, adding that "from the viewpoint of the Intelligence Ministry he is guilty".

Deputy judiciary chief Ebrahim Ra'isi said only the court could decide on Mousavian's case. "Everyone must respect the court's decision," he was quoted as saying by IRNA.

Jamshidi said the case should not be used by opposing camps because it could undermine the legal procedure.

"Judicial and security cases like this, which are very sensitive, must not be spread among the public and all those speaking for or against him (Mousavian) should not say anything to derail the dossier from its main path," he said.

Mousavian is a moderate conservative with ties to the political camp of influential former President Akbar Hashemi Rafsanjani, a political rival of Ahmadinejad.

The United States says it wants a diplomatic end to the nuclear row but has not ruled out military action if that fails. Iranian critics say Ahmadinejad's speeches berating the West and his uncompromising position could fuel hardliners in Washington.