The National Post reports,

Several experts are casting doubt on reports that Iran had passed a law requiring the country’s Jews and other religious minorities to wear coloured badges identifying them as non-Muslims.
The Iranian embassy in Otttawa also denied the Iranian government had passed such a law.
A news story and column by Iranian-born analyst Amir Taheri in yesterday’s National Post reported that the Iranian parliament had passed a sweeping new law this week outlining proper dress for Iran’s majority Muslims, including an order for Jews, Christians and Zoroastrians to wear special strips of cloth.
According to the reports, Jews were to wear yellow cloth strips, called zonnar, while Christians were to wear red and Zoroastrians blue.
The Simon Wiesenthal Centre and Iranian expatriates living in Canada had confirmed that the order had been passed, although it still had to be approved by Iran’s “Supreme Guide” Ali Khamenehi before being put into effect.
Hormoz Ghahremani, a spokesman for the Iranian Embassy in Ottawa, said in an e-mail to the Post yesterday that, “We wish to categorically reject the news item.
“These kinds of slanderous accusations are part of a smear campaign against Iran by vested interests, which needs to be denounced at every step.”

Full story.
[Update] The Advertiser reports,

Iran’s only Jewish MP strongly denied reports in a Canadian newspaper overnight that Iran may force non-Muslims to wear coloured badges in public so they can be identified.
“This report is a complete fabrication and is totally false,” Maurice Motammed said in Tehran. “It is a lie, and the people who invented it wanted to make political gain” by doing so.

Full story.
[Update] Canadian Press:

Another Iranian legislator said the newspaper has distorted a bill that he presented to parliament, which calls for more conservative clothing for Muslims.
“It’s a sheer lie. The rumours about this are worthless,” Emad Afroogh said.
Afroogh’s bill seeks to make women dress more traditionally and avoid Western fashions. Minority religious labels have nothing to do with it, he said.
“The bill is not related to minorities. It is only about clothing,” he said.
“Please tell them (the West) to check the details of the bill. There is no mention of religious minorities and their clothing in the bill.”

Full story.
Iranian blogger Kamangir lists the actual stipulations of the new law here.
Someone should get on the horn and ask Marvin Hier where he got his information from and how he went about “confirming” this garbage. At first I thought it was still possible, even with the Jewish MP saying it wasn’t true because in Nazi Germany they also thought it was a wiser policy to keep their mouths shut so as not to worsen their fate. But a fabrication like this endangers the Jews of Iran even moreso because, well, appearances are everything.
What seems apparent from this, at least to me, is that powerful forces are attempting to build international support for an invasion of Iran by equating its actions with that of Nazi Germany’s loudly in the press. Now look who’s being put in the middle of it, and ask yourself why… Edith Everett was on to something. First they pinned Iraq on us, now they’re going to pin Iran on us, and when America is bankrupt and a generation of kids come home in flag-draped coffins, Bush and his pals will be counting their stacks while both the extreme Left and the extreme Right point their fingers at the Zhids. And then what? Someone else at WorldNetDaily writes about the ease with which the Jews can be expelled from America?
In any event, this story has already spread like wildfire around the web, and as is likely the hope of whoever wished for this story to make headlines, I doubt the correction/retraction will reach as many as the now debunked myth has. So do us all a favor, be vigiliant in refuting whoever tries to use this as ammo to justify a war with Iran.