President Mahmoud Ahmadinejad cancelled a visit to Avhaz at the last minute blaming the weather.
A government spokesman said Mr Ahmadinejad had ordered an investigation into what was described as being a brutal act carried out by unnamed "international terrorists."
Witnesses said the first bomb to rock the city, dominated by ethnic minority Arabs and capital of oil-rich Khuzestan province, was in front of a private bank and busy commercial area. The second was in front of a government building.
The latest toll was eight dead and 46 injured, local hospital director Mansoor Soltanzadeh told official media.
"The president had been scheduled to give a speech this morning in Ahvaz, although the bombs did not explode in the same place where the speech was scheduled to have been delivered," an aide to the president said.
"President Ahmadinejad's visit to the province was cancelled yesterday (Monday) afternoon because of bad weather," he said.
Foreign involvement
Gholam Hossein Elham, a government spokesman, said Mr Ahmadinejad ordered the intelligence and foreign ministries to probe "the role of foreign hands" in the bombings.
"The president has ordered a prompt and firm probe into today's blast and the terrorists who executed it.
"The intelligence and foreign ministries have to probe the role of foreign hands in this incident," Mr Elham said. "Iran has always been victimised by terrorism, and these blind blasts show the continuity of brutal acts against Iran by international terrorists."
Situated close to the border with British-controlled southern Iraq, Ahvaz has been hit by a wave of insecurity over the past year. These include ethnic riots in April and a string of car bombings prior to the June presidential election in which Mr Ahmadinejad scored a shock victory.
In October another double bombing in Ahvaz killed six people and wounded more than 100 and there were several pipeline blasts, with sabotage reportedly suspected in at least one of those incidents.
Ahvaz Governor Mohammad Jafar Sarami said, "We think this is by the same movements who were behind the previous incidents. Most of them had been arrested but there were a few on the run."
Interior Minister Mostafa Pour-Mohammadi also said the attacks were "directed from abroad." However, he stopped short of repeating past allegations that Britain, which has troops in neighbouring Iraq, was trying to destabilize the area.
Nursing a bandaged head, bank manager Samad Tavakoli described a "huge bang" outside his now totally destroyed branch.
"We had a lot of customers in the bank. There was a sudden power cut and then an explosion. It was a really huge bang. All of my 15 employees were injured, and one lost her leg," he said.
"I thought the city had been hit by a rocket," said Meysam Nourian, an office worker. "I went into the street and saw smoke, burned bodies. It was a horrific sight."
Inside an Ahvaz hospital, an injured 27-year-old bank worker who gave his name as Ali lashed out at "godless people" and "foreign agents".
"I was sitting and filling out forms, and suddenly I was knocked out. There was a huge shockwave," he said.
British denial
Britain has consistently denied being behind the unrest and insecurity in the area or aiding ethnic Arab separatists.
Arabs are said to represent three percent of Iran's population of 69 million, who are mainly Farsi speaking, but they are believed to make up close to 50 percent of Khuzestan's population.
The Khuzestan region was devastated during the Iran-Iraq war between 1980 and 1988. Many area residents have complained of continued poverty and a lack of job opportunities despite the province's huge oil reserves.
The rioting last April was also sparked by a forged official letter saying Tehran wanted to change the province's ethnic makeup.
In October, Foreign Minister Manouchehr Mottaki said the clerical regime had proof of British meddling.
"The information shows that Britain is seeking to create insecurity in our country by interfering in our internal affairs," Mr Mottaki said at the time, also warning that the consequences "could be worrying for the British."
The allegations came amid a wider deterioration of relations between Tehran and London over alleged Iranian meddling in Iraq and the Islamic republic's disputed nuclear program.