The home secretary is banning Muslims Against Crusades (MAC), a group that planned an anti-Armistice Day protest.
Theresa May's order will make membership or support of MAC a criminal offence. It is closely linked to seven other previously-banned groups.
The organisation, now dissolved, said "the call for Islam will never be silenced by any ban or proscription".
Mrs May said she was satisfied that Muslims Against Crusades (MAC) was "simply another name for an organisation already proscribed under a number of names".
"The organisation was proscribed in 2006 for glorifying terrorism and we are clear it should not be able to continue these activities by simply changing its name," she said.
Muslims Against Crusades is the latest incarnation of an organisation originally set up by extremist preacher Omar Bakri Mohammed, who fled the UK six years ago.
Its previous versions are all proscribed groups.
Most recently, it has been involved in potential stand-offs with the English Defence League and it also demonstrated outside the US Embassy on the 10th anniversary of 9/11.
Anjem Choudary, the leading public figure in the organisation, accused the government of attempting to cover up the truth - but hours later the group declared that it was "hearby dissolved".
The planned "Hell for Heroes" demonstration was also scrapped.
Anyone who would have joined the demonstration as a member or supporter of MAC could face up to 10 years in jail.
Individuals can be charged with an offence if police have reasonable suspicion that activities are linked to a banned group.
In a statement on its website, MAC said: "The intended banning of Muslims Against Crusades by Home Secretary Theresa May is a great victory for Islam and Muslims and highlights the sheer hatred the British government has towards sincere Muslims who wish to peacefully speak out against policies that are (from every angle) anti-Islam and anti-Muslim."
During its 2010 protest, members of the group burned poppies and chanted "British soldiers, burn in hell".
One of the group was found guilty of public order offences and fined.
The judge in the case described the actions as a "calculated and deliberate insult to the dead and those who mourn or remember them".
Julie Siddiqui of the Islamic Society of Britain had been organising a counter-demonstration for Friday.
She said: "In one sweep, Muslims Against Crusades display an unspeakable disregard for the feelings and common bond of our countrymen and women, a contempt and rejection of our hard-earned democracy and its institutions, a disdain for the majority of British Muslims - who do not share their views - and a violation of the example of the Prophet Muhammad."
Tory MP Mike Freer welcomed the decision to proscribe Muslims Against Crusades.
Last month one of his constituency meetings, being held in a mosque, was disrupted by Muslims Against Crusades.
He was moved for his safety to a locked part of the building while its management waited for police to arrive. MAC later denied threatening Mr Freer.
Mr Freer said: "What we must also do is ensure that any new incarnation of this group continues to be monitored because past history tells us that this group does reform, rename and reappear."
Home of hate preacher Anjem Choudhary is raided by police hours after Home Secretary bans poppy-burning extremist group