Thousands of Iranians demonstrating against the shah yesterday in the continued defiance of government prohibition against demonstrations. Newspapers reported another eight deaths in clashes between protestors and security forces througout Iran.

Youths set a downtown movie theater ablaze in Tehran as troops used teargas and fired guns into the air to disperse protestors. No one was killed in the theater fire. Disturbances in Tehran's commercial areas intensified after the army pulled out most of its heavy armor and concentrated remaining units around Tehran University.

More than 10,000 persons gathered at the university to demand the government's resignation and shout support for exiled religious leader Ayatollah Ruhollah Khomeini. An estimated 10,000 supporters of the shah staged a counter-demonstration, shouting "Long live the shah."

Reports reaching Tehran said anti-government demonstrations occurred in 37 cities and towns, including Kermanshah and Dezful, where the eight deaths were reported.

An estimated 1,000 persons have been killed in rioting this year. But tensions have escalated since last month when the government declared martial law in Tehran and 11 other cities in an effort to end protests by orthodox Moslems against the shah's program of westernization.

Fifteen people were reported killed in clashes Saturday. Several American civilian employes on an Iranian military project were injured Saturday when youths stoned their bus as it was leaving an Iranian air force base.

In a related development, the newspaper Ettelaat reported that 34 key officers of the SAVAK secret police were retired or fired, including Parviz Sabeti, the deputy director. SAVAK has been one of the key targets of the protestors.