The Court of Appeal in London ruled there were 'no valid grounds' to contend that the Proscribed Organisations Appeal Commission made legal errors when it ordered the People's Mojahedin Organisation of Iran (PMOI) to be removed from the blacklist.

Three judges, headed by the Lord Chief Justice, Nicholas Phillips, refused interior minister Jacqui Smith permission to appeal against the commission's decision that the PMOI was not 'concerned in terrorism.'

The PMOI is on the European Union's list of terrorist organisations subject to an EU-wide assets freeze, and has been designated by the US government as a foreign terrorist organisation.

The group welcomed Wednesday's ruling and called to be removed from the EU list.

'Europe must now recognise the Iranian resistance for democracy in Iran,' said Mr Maryam Rajavi, president-elect of the National Council of Resistance of Iran, which includes the PMOI.

British lawmaker Lord Robin Corbett of Castle Vale, who has supported the PMOI's campaign, told AFP that the United States' listing of the group was a 'copycat' measure following the EU move.

'What we now know is that the Iranian resistance is the friend of freedom and those in power in Teheran are the enemies,' he said.

For her part, Ms Smith said she was 'very disappointed' by the court ruling and said the PMOI 'has a long history of terrorism and this is why it was proscribed both in the United Kingdom and by other countries around the world.' 'Because of this history, the government took a cautious approach to its application for de-proscription,' she added.

'We will ensure that the safety of the public is not in any way jeopardised by this and tighten legislation if necessary. While we will consider the judgment carefully, it has no affect on other proscription cases.'

The Iranian Embassy in London also criticised the ruling, claiming it had 'discredited' Britain's position in combating extremism and suggested it could have 'serious repercussions' for peace, security and international relations.

In a statement it said it considered the judgment as 'clear evidence of insincerity on the part of Britain in its approach towards tackling terrorism specially in our region.'

'This politically-motivated ruling in no way acquits the British government from its responsibilities in an indiscriminatory fight against terrorism,' it added. -- AFP