The ruling council (the real power in Iran) agreed to a partial recount but will not annul the election results:

Iran’s top legislative body on Tuesday ruled out annulling a disputed presidential poll that has prompted the biggest street protests since the 1979 Islamic revolution but said it was prepared for a partial recount.
In what appeared to be a first concession by authorities to the protest movement, the 12-man Guardian Council said it was ready to re-tally votes in the poll in which hard-line President Mahmoud Ahmadinejad was declared the runaway winner.

They’re also attempting to control the message by arresting foreign press members who video anything in Tehran, not just the protests:

Iran’s hard-line regime, starting to show stress under the mounting pressure of massive opposition rallies, has told foreign media that if they’re seen on the streets of Tehran today with a camera, they will be arrested.
[…]
“No journalist has permission to report or film or take pictures in the city,” a Culture Ministry official told the Reuters news agency.

Too bad they can’t control what’s being reported on Twitter, though they are trying.
And there’s crackdown on sympathetic Iranian Revolutionary Guards, 16 of them may have been arrested.
(via)
Also, Leading Iranian blogger was arrested.
(via)

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