Iran plans to open bank accounts for 36 million people, about half its population, to give them cash in compensation for higher food and energy prices when subsidies are phased out, according to Iranian media reports.
Parliament last month supported government proposals to end subsidies on basic goods ranging from gasoline to wheat and rice, a key plank of the president Mahmoud Ahmadinejad's plans to reform the major oil producer's economy.
The government says hefty fuel subsidies benefit mainly the wealthy and that low-income families will be compensated.
The business daily Sarmayeh said the cash compensation would total up to 170,000 rials (Dh63) per person and would cover 70 per cent of the population, including children.
Social welfare minister Nadali Olfatpour said his ministry has been told to open bank accounts for 36 million people in five social brackets, the daily Jam-e Jam said.
Analysts say a cut in energy subsidies would reduce demand for gasoline and make Iran less vulnerable to any new sanctions on gasoline imports imposed over its disputed nuclear programme.
Iran is the fifth-largest oil exporter in the world.