* Activists, journalists among 900 "political prisoners"
* U.N. rights envoy says Rouhani has failed to deliver
* New legislation may further suppress dissent, he says
By Stephanie Nebehay
GENEVA, March 14 (Reuters) - President Hassan Rouhani has made only "baby steps" to improve human rights in Iran where forces loyal to the supreme leader are "working to suppress the rights of people," a United Nations investigator said on Friday.
Ahmed Shaheed, U.N. special rapporteur for human rights in Iran, said the country was holding almost 900 political prisoners, "including people persecuted for religious activities, lawyers and journalists."
In his latest report to the U.N. Human Rights Council Shaheed said there were 379 political activists, 292 religious practioners, 92 human rights defenders, 71 civic activists, 37 journalists and bloggers and 24 students held as what he defined as political prisoners.
Iran has refused to let Shaheed enter Iran, saying its human rights record is good and accusing the West of using the issue as a pretext to add pressure to a country already under sanctions for its nuclear activities.
His reseach is based on interviews with 72 Iranians in Europe and statements submitted by 61 people in Iran and Turkey, many of them former prisoners who complained of "cruel, inhumane or degrading treatment and prolonged solitary confinement" and lack of access to a lawyer, he said.
Rouhani's landslide election win in June had raised hopes among human rights campaigners for change in Iran, but, perhaps wary of further antagonising powerful hardliners scpetical of his rapprochement with the West on the nuclear issue, he has not made significant policy changes on political freedoms.
"Despite the rhetoric that he would embark on reforms, having taken some baby steps, the challenges remain very major," Shaheed told a news conference in Geneva.
"Iran is still overlaid by very draconian, as it were, sorts of practices in the judiciary, the intelligence officials (and) the Revolutionary Guard in a system that is actually working to suppress the rights of people," he said.
The Revolutionary Guards are a powerful military force loyal to Supreme Leader Ayatollah Ali Khamenei.
In the highest-profile case, Mehdi Karoubi and Mirhossein Mousavi, presidential candidates in 2009 who lost to Rouhani's predecessor Mahmoud Ahmadinejad in an election their supporters said was rigged, have been under house arrest since 2011.
Shaheed, a former foreign minister of the Maldives, said the lack of due process amounted to arbitrary detention.
He also highlighted the fact that Iran executed more people per capita than any other country, with at least 687 people put to death last year, an increase of 165 on the previous year.
"I am still at a loss to understand how a reformist president should be in office and see such a sharp rise in executions. The government hasn't given an explanation, which I would like to hear," Shaheed said.
Most of the executions were for drug offences, but there were also 16 members of the Baluch minority hanged last October in what Shaheed called "reprisal killings" for an attack by an armed group on security forces near the Pakistan border.
A "political crime bill", introduced in parliament in September by speaker Ali Larijani, raises the prospect of fewer, rather than more, political freedoms, Shaheed said.
"The bill appears to impose further limits on freedom of expression, association and assembly," he said.
The law would criminalise anyone who defames, insults or publishes false information about government officials, he said. "It extends to cover legitimate dissent." (Editing by Robin Pomeroy)