State, Treasury and Justice departments closed the Washington office of the National Council of Resistance of Iran (NCRI) on Friday, placing notices on its doors declaring that it was now banned, officials said.
US federal agents acted after Secretary of State Colin Powell clarified earlier “terrorist” designations of the NCRI's parent organisation, the People's Mujahedeen or Mujahedeen e Khalq (MEK), they said.
No one was in the office when agents arrived, according to one official.
Telephone calls to the group's representatives were not answered.
The order also freezes the group's US assets and bars US citizens from making contributions to it, the officials said.
In addition, they said suspected members of the group in the United States had been notified that their continued affiliation was now illegal.
"Any continued material support for the MEK or use of its facilities or property under any of its aliases and any unauthorized dealing in property in which the MEK has an interest is a violation of US law," one official said.
Powell's clarification, published in the Federal Register, said the MEK under all of its aliases - including the NCRI, the National Council of Resistance and the People's Mujahedeen Organisation of Iran (PMOI) - are now considered "foreign terrorist organizations."
"Its history is studded with anti-Western attacks as well as terrorist attacks on the interests of the clerical regime in Iran and abroad."
-The US State Department in the latest edition of its "Patterns of Global Terrorism" report
The designation includes "its US representative office and all other offices worldwide," Powell said.
His decision was "based on information from a variety of sources that those entities functioned as part of the MEK and have supported the MEK's acts of terrorism," said Tom Casey, a State Department spokesman.
In a separate notice, the Treasury Department's Office of Foreign Assets Control declared the NCRI under all of its aliases "including its US press office" to be a "Specially Designated Global Terrorist" group.
Friend or foe?
The People's Mujahedeen was first named a "terrorist" organisation in 1997, when the administration of President Bill Clinton took the step as a conciliatory gesture to Iran.
Iran welcomed the decision at the time but until Friday the Washington office of the NCRI remained open while it fought the ban in US courts.
Amid the uncertainty over its status, the NCRI gave frequent news conferences at its office in the National Press Building, just blocks from the White House, and at Washington hotels to denounce the Iranian government.
At times, the United States used information provided by the NCRI to highlight its concerns about Iran's nuclear programme, which Washington believes is a cover for atomic weapons development.
Confusion over the group's status was a complicating factor during the Iraq war as US troops were forced to confront armed elements of the People's Mujahedeen to which former Iraqi leader Saddam Hussein had given shelter.
Asked to address the apparent contradiction, State Department spokesmen had repeatedly demurred, referring reporters to the Justice Department which enforces US federal laws.
NCRI leader Maryam Rajavi was arrested and released by the French in June
The group - which is also considered a “terrorist” organisation by the European Union and Iran - denies all wrongdoing and maintains that it represents legitimate opponents to Tehran's religious leadership.
With a programme that blends left-wing and Islamic ideology, it took part in the 1979 revolution in Iran, but the movement was suppressed in the years that followed and its members fled abroad with the military wing taking refuge in Iraq in 1986.
The State Department has accused the group of conducting "internal security operations in support of the government of Iraq" during Saddam's time in power.
"Its history is studded with anti-Western attacks as well as terrorist attacks on the interests of the clerical regime in Iran and abroad," the department said in the latest edition of its "Patterns of Global Terrorism" report.
The US move against the People's Mujahedeen follows a similar crackdown on the group in France, where police raided their headquarters in a Paris suburb in June, arresting scores of people.
The group's leader, Maryam Rajavi, was one of more than 160 people detained in the raids and her arrest outraged her followers, with a spate of self-immolation protests across Europe that left two women dead.
Rajavi and 16 others who were then placed under investigation were granted conditional release in early July after two weeks in detention, although that does not preclude charges being brought against them.