Iran on Thursday condemned a London Court of Appeal ruling that denied the British government permission to challenge a November 2007 decision by a panel of judges that ordered the removal of MEK from the terrorist list.

Iran's Foreign Ministry spokesman Mohammad Ali Hosseini said his country "strongly condemns the removal of Monafeqin [literally 'Hypocrites', the official name the Iranian government refers to MEK by] from a terrorist list and regards this ruling as political, legally baseless and a sign of Britain's dual approach to terrorism."

In a statement, he warned the move would "only help to promote terrorism and violence," adding that the "massive measures taken by the Hypocrites against the Iranian people and officials are known to everyone."

The court in London ruled Wednesday there were "no valid grounds" to contend that the Proscribed Organizations Appeal Commission made legal errors when it ordered the removal of the MEK from the terrorist blacklist.

Throwing out the appeal, filed by British Home Secretary Jacqui Smith, is the final legal avenue regarding this case, thus ultimately legalizing the organization in the United Kingdom.

This new legal status for the group is expected to expand to the rest of the European Union and the United States, where the MEK has been blacklisted for resorting to armed resistance against the Islamic regime in Tehran.

Maryam Rajavi, president-elect of the National Council of Resistance of Iran, of which the MEK is a member, said after the ruling that "Europe must now recognize the Iranian resistance for democracy in Iran."

European officials expected the EU to follow the British ruling, after which the U.S. would likely do the same when the State Department reviews the status of the organization in October.

The MEK was established in the 1960s by college-educated Iranian leftists opposed to the pro-Western regime of Shah Mohammad Reza Pahlavi and took part in the 1979 Islamic Revolution.

But the new religious rulers quickly turned against the organization and its surviving members fled to Europe, and moved their bases to Iraq in the mid-1980s, where they were sheltered and financed by Saddam Hussein's regime in Baghdad. From Iraq, the MEK organized a campaign of attacks against Iranian targets inside Iran and abroad and fought with Iraqi troops during the 1980-88 Iraq-Iran war.

Since the U.S. forces cracked down on its bases in Iraq at the start of the 2003 U.S. invasion of Iraq, the MEK's military activities and membership were largely reduced, and the British courts seem to have viewed this decline as evidence that the group no longer poses a terrorist threat.

The British panel last November had found that the organization "has not at any time since 2003 sought to re-create any form of structure that was capable of carrying out or supporting terrorist acts. There is no evidence of any attempt to 'prepare' for terrorism. There is not evidence of any encouragement to others to commit acts of terrorism."

The Court of Appeal on Wednesday supported the earlier ruling that while the MEK "has retained networks and supporters inside Iran … they have been directed to social protest, finance and intelligence gathering activities, which would not fall within the definition of 'terrorism.'"

Nevertheless, it is still regarded as the most potentially powerful force in the Iranian resistance, and the rulers in Tehran seem to realize this.

They also appear to recognize that the British judicial verdict would have a domino effect in the rest of the Western world, viewing it as more of a political decision to escalate the pressure on the country's growing political influence in the region and its drive to push through with its nuclear program.

Analysts say that Iranian concerns over a Western legitimization of the MEK is justified, amid U.S. and Israeli threats to possibly resort to military strikes against the country's nuclear facilities.

The MEK has made no secret of collaborating with Britain and the United States in providing intelligence information regarding Iran's nuclear program, which Tehran insists on pursuing for peaceful energy purposes and the West fears could lead to building nuclear weapons.

A MEK statement following the ruling urged the British authorities and EU to allow it to resume normal activities, adding it was "committed to restoring democracy in Iran and opposes any attempt by Iran to acquire nuclear weapons."

The group added that its agents were the first to provide London and Washington with the intelligence indicating Iran was obtaining atomic weapons, in a sign that the organization is offering its services against the Tehran regime in return for its legitimization as a peaceful resistance group.