The minister said the activities of the group violated the Societies Act "and if left unchecked, could pose a threat to public order, peace, security and morality in Malaysia".
"I feel that if we don't rein in their activities, they will continue to jeopardise security and public order, and our country's sovereignty, as well as upset the harmony among races," he said in a statement late on Wednesday.
Syed Hamid said Hindraf repeatedly organised protests without permits and tarnished the country's image by seeking international support for its activities, adding that it was not even a registered body.
The government has repeatedly said that Hindraf was a threat to the fragile race relations between the majority Malay-Muslims and the mainly non-Muslim, ethnic Chinese and Indians, who make up a third of the population.
Hindraf, however, says that it is engaged in a peaceful struggle to end discrimination against ethnic Indians.
|Riot police came down hard on Hindraf protesters last November
The local Star
English daily quoted R S Thanenthiran, the movement's national co-ordinator, as saying that the ban was unfair because they had not committed any crime or broken any laws.
Last year the group applied to be registered as a society but the ban, effective immediately, means that it is unlikely to get an approval.
N Surendran, a lawyer who frequently represents Hindraf supporters, said anyone who joins activities associated with the group faces up to five years in jail prison
"It's a way to criminalise Hindraf ... with the aim to stamp out the movement. They are trying to make things more difficult," he said.
"It's not going to work obviously. It will anger not just the Indians but other Malaysians because most don't view Hindraf as a threat."
Last November the group led tens of thousands of ethnic Indians in a rare street protest calling for an end to government policies that favour ethnic Malays in business, education and public sector employment.
Five Hindraf leaders, detained during the protest which was quelled with tear gas and water cannons, remain in prison under the country's Internal Security Act, which allows for indefinite detention without trial.
A sixth leader fled the country and now lives in exile in London.