TEHRAN, Iran (CNN) -- In a bid to ease tensions between moderates and conservatives, Iran's hard-line parliament Wednesday approved President Mohammad Khatami's choice of a moderate cleric for the powerful post of interior minister.

But the spirit of conciliation could be put to the test Thursday, when Tehran's popular mayor, Gholamhossein Karbaschi, a moderate ally of Khatami, goes to court to hear the verdict in his trial on corruption charges.

If found guilty of embezzlement, bribery and mismanagement, Karbaschi could face a long prison term and stiff fines. His supporters insist the charges have been trumped up by his conservative opponents in an effort to undermine moderate political forces pushing for more openness in Iranian society.

"No one is interested in the rights or wrongs of the mayor's actions," one political commentator, who asked not to be identified, told Reuters. "This is a battle in the political war between supporters of President Khatami and the conservatives."

On Wednesday, the parliament voted 177-67 to confirm Khatami's choice of Abdolvahed Mousavi-Lari as interior minister, with the power to appoint provincial administrators, oversee elections and approve political rallies.

Khatami's last interior minister, Abdollah Nouri, was impeached by hard-liners after allowing public demonstrations that rocked the country.

Mousavi-Lari supports liberalization policies

Mohammad Reza Bahonar, a leader of the conservative majority in parliament, said most of his faction believed Mousavi-Lari wasn't "competent" to be interior minister.

"We ... decided not to oppose Mousavi-Lari in an attempt to reduce tension," Bahonar said, while noting that Mousavi- Lari, like Nouri before him, could be impeached.

Before the vote, Khatami, a moderate cleric elected in a landslide in May 1997, told deputies that "today we must accept that people do have rights, and we must pave the way for the materialization of these rights."

"In this regard, the interior minister holds a very sensitive position," he said.

Mousavi-Lari has vowed to carry on the government's liberalization policies, including greater political pluralism and expanded rights for women. He also signaled a break from Nouri's more confrontational style, meeting with hard-liners and promising to work within the letter of the law.

"My style is dialogue and mutual understanding," he said.

Mousavi-Lari was deputy minister of culture and Islamic guidance from 1982 to 1992, when Khatami served as minister. He quit when Khatami was sacked by hard-liners who objected to his attempts to increase press freedom and reduce restrictions on television and movies.

Reuters contributed to this report.