The prime minister's office made the announcement affecting the al Badil al Hadari (Civilised Alternative) party, which had been among Islamist parties allowed to operate legally.

Al Hadari's chief, Mustapha Moastassim, was among 32 people arrested in the police operation on Monday and Tuesday and accused of planning attacks against unspecified targets in Morocco.

It was the first time a leader and top officials from a legal Islamist party had been linked to terrorism. Police said the network was headed by Abdelkader Belliraj, a Moroccan who lived in Belgium.

"The prime minister decreed the dismantling of al Badil al Hadari within the framework of the break-up of the Belliraj terrorist network and in the light of the proven links between this network and the creation of this party," Prime Minister Abbas El Fassi's office said.

It added in a statement that there were also "serious indications of the involvement of the party's main leaders" in the network.

The Interior ministry said police discovered at least 34 weapons, including two Israeli-made UZI assault rifles, when they raided homes and offices of the suspects.

Morocco, which has been on alert since suicide bombings killed 45 people in Casablanca nearly five years ago, has broken up more than 60 cells of terror suspects since then and arrested more than 3,000 people in the process.

Morocco considered banning the moderate Islamist Justice and Development Party (PJD) after the bombings but it survived the crisis.

The largest Islamic opposition movement, Al Adl Wal Ihssane (Justice and Charity), is tolerated by King Mohammed's government but banned from mainstream politics because of its open hostility to the monarchy.