DUBAI - A committee of Iranian lawmakers has rejected a government plan to increase prices for subsidized food and fuel in a move that threatens to derail a drive to rein in the country's sanctions-squeezed budget, Iranian media reported late on Saturday.

International sanctions imposed over Iran's nuclear program have sharply reduced the amount of money Tehran earns from oil, upping pressure on President Mahmoud Ahmadinejad to push through cuts in government spending worth tens of billions of dollars by scaling back subsidies for the population.

But a parliamentary committee examining this year's budget - which the overall parliament has yet to approve - rejected the size of the proposed cuts, setting the stage for a possible compromise deal that may force the government to sign up to far less ambitious cost-savings.

"The Majlis (parliament) may agree to raise energy prices to some extent, but far less than the administration has requested," the parliament's Integration Committee said, according to the Mehr News agency.

Please LIKE our Facebook page - it makes us stronger