Tuesday's decision by the administrative chamber of the Algiers Court came after a complaint against Ali Benflis, the FLN's secretary-general, by supporters of President Abd al-Aziz Bouteflika.
The faction's leader, Foreign Minister Abd al-Aziz Belkhadim, accused Benflis of taking over the FLN at a party congress last March.
Belkhadim said 75 of the FLN's 203 deputies have joined his reform movement, as well as 3000 local assembly members and a large number of activists.
The court also froze the FLN's funds.
Benflis reacted immediately to the move, saying it "shows once again that the president... will stop at nothing to slake his unquenchable thirst for power".
"I will go to this election, strenghtened by the support of my fellow citizens and determined to turn the page on the era of ostracism and monopolistic exercise of power," he said.
The FLN secretary-general, fired as government chief by Bouteflika in May, has announced his candidacy in next April's presidential election.
The president, meanwhile, has not yet said whether he will vie for a second term.
Bouteflika has yet to announce if
he will seek a second term
Benflis was re-elected secretary general of the FLN, the north African country's former sole ruling party, at the party congress in March.
The congress also broadened his powers and dropped the FLN's backing of Bouteflika, whom the party had propelled to power in April 1999.
The FLN is facing its worst internal crisis since bloody riots in October 1988 ended the monopoly of power it had enjoyed, following independence from France in 1962.
The rivalry between Bouteflika and Benflis came into full public view in September when the president sacked six ministers known to be close to Benflis.
Then on 2 October, the FLN withdrew all other pro-Benflis ministers from the government because of what it described as Bouteflika's "irresponsible and heretical behaviour".