The government has been denied permission to challenge an order that it take an Iranian opposition group off a list of banned terror organisations.

The Court of Appeal ruled an appeals panel was right to order the removal of the People's Mujahideen Organisation of Iran (PMOI) from the blacklist.

The appeals panel had said the PMOI was not "concerned in terrorism" for the purposes of the 2000 Terrorism Act.

Home Secretary Jacqui Smith said she was very disappointed with the ruling.