The Islamist group which provoked outrage with its plan to march through Wootton Bassett will be banned, Home Secretary Alan Johnson announced today.
The order will come into effect on Thursday and make it a criminal offence to be a member, punishable by up to 10 years in prison.
Mr Johnson said the group had tried to escape proscription simply by changing its name.
He said the order would apply to the group's other names, including Al Muhajiroun.
He said: "I have today laid an order which will proscribe Al Muhajiroun, Islam4UK, and a number of the other names the organisation goes by.
"It is already proscribed under two other names - Al Ghurabaa and The Saved Sect.
"Proscription is a tough but necessary power to tackle terrorism and is not a course we take lightly.
"We are clear that an organisation should not be able to circumvent proscription by simply changing its name."
The law to ban the group is made in a parliamentary order which was laid in the House of Commons today.
Islam4UK is lead by Anjem Choudary, who founded Al Muhajiroun in the 1980s with radical cleric Omar Bakri Mohammad.
Choudary's announcement of a planned march through Wootton Bassett caused dismay.
The Wiltshire town, near to RAF Lyneham where fallen servicemen are repatriated, has come to symbolise the country's commitment to its war dead.
Critics called for police to ban the march in advance, but Choudary dropped the idea on Sunday.
The ban is an extension of an existing order made under the Terrorism Act 2000 that bans the group under the name Al Ghurabaa and The Saved Sect.
From Thursday it will be banned under the names Call to Submission, Islam4UK, Islamic Path, and London School of Sharia.
The Terrorism Acts allows groups to be banned that "commit or participate in acts of terrorism, prepare for, promote or encourage terrorism or are otherwise concerned in terrorism".
It was amended in 2006 to widen the grounds for banning to include organisations which "unlawfully glorify the commission or preparation of acts of terrorism".
Anyone arranging a meeting in the name of Islam4UK would be breaking the law, as would anyone wearing group emblems or clothes.
The order also gives the authorities powers to seize and freeze its assets.
Mr Choudary told BBC Radio 4's Today programme: "The word 'terrorism' has been defined in the dictionary as the use of violence against a community or a section of the community.
"I have been campaigning to say that that is precisely what the British Government is doing in Iraq and Afghanistan and even domestically.
"Oddly, we are now being targeted as an extremist or terrorist organisation and even banned for merely expressing that. I feel this is a failure of the concept of democracy and freedom.
"Ultimately, what the people will see is if you don't agree with the Government and you want to expose their foreign policy, then freedom quickly dissipates and turns into dictatorship."
He denied Islam4UK members were involved in violence: "I challenge anyone to authentically prove that any of our members have been involved in any violent activities or promoting violent activities or asking anyone to carry out any sort of military operations.
"We are always at pains to stress that we are an ideological and political organisation.
"We won't be using those names and those platforms which have been proscribed, but I can't stop being a Muslim, I can't stop propagating Islam, I can't stop praying, I can't stop calling for the Sharia. That's something I must do, and ultimately I will pay whatever price I need to for my belief.
"I believe if an ideology is worth having, you need to struggle for it and you need to sacrifice for what you believe. I don't believe the Government are willing to do that, but I am willing to do that and I believe that ultimately we will prevail."
At a London press conference, Mr Choudary warned that the ban would force young Muslims "underground" and suggested they could turn to violence.
"You will push people underground. After that we will have no control over the youth. At the present time we can gather the youth together," he said.
"There are many people who do not agree with us that there is a covenant of security in Britain. This measure will fuel those feelings.
"This is not a threat; this is a warning of what possibly could transpire if you do not allow Muslims to practise their own faith.
"This is the biggest favour the British Government could do for organisations like ours. It will rally the youth to our side."
Mayor of Wootton Bassett Steve Bucknell said of the news: "Wootton Bassett, as ever, wishes to stay out of the politics of the situation.
"I'm very pleased the march was called off in the first instance and I hope that no one else tries to arrange any kind of march or protest, whatever their motivation.
"We just don't want that kind of thing in Wootton Bassett. We'll keep on paying our respects for as long as is necessary because it feels like the right thing to do.
"We never wanted all this attention - it's been a bit of a surprise. We would welcome the ability to pay our respects without all this going on in the background."
Home Office figures show that since 2001 a total of 31 people have been charged with criminal offences related to banned groups. Of those, 15 were convicted.
A total of 45 international terrorism groups are listed on the Home Office website as banned under the Terrorism Act.
Former prime minister Tony Blair pledged to ban Hizb ut-Tahrir after the 7 July bombings, but the Government has not carried out the threat.
Officials said other groups are monitored by counter-terrorism agencies but have not been proscribed because they do not meet the strict criteria.
James Gray, Tory MP for North Wiltshire, who is a familiar face at the weekly repatriations in his constituency, said today: "The people of Wootton Bassett would take no view on whether or not this group should be banned.
"But, speaking as an MP with a particular interest in defence and security, I'm very glad the Home Secretary has got round to doing what he's doing.
"Islam4UK is a splinter group for a number of other organisations that have previously been banned.
"Mr Choudary can sound like a clever, cheerful lawyer, modest and sensible, and in a sense that's even more worrying than extremist hate-preachers."
Al-Muhajiroun founder Omar Bakri Muhammad, who is barred from Britain, suggested that the banning of Islam4UK could have negative consequences.
Speaking from Lebanon, he told BBC Radio 4's World At One: "If you are going to ban us, I believe you are causing problems and God knows what is going to happen. I don't want to see any other 7/7 in the UK, but if the ban continues like this it is very strange."
Inayat Bunglawala, a spokesman for the Muslim Council of Britain, told World At One: "The overwhelming majority of British Muslims find the provocative antics of Al-Muhajiroun and its various offshoots to be highly divisive and frankly loathsome, so there won't be any Muslims shedding tears over the proscription today.
"However, there is a question to be asked over whether banning them is the best way forward.
"Shouldn't we, as a democracy and a country which upholds the rule of law and order, be banning individuals who break the law rather than banning organisations?
"What we should be doing as a confident democracy is upholding values of pluralism and showing that we can tolerate people whose views are so outlandish and so repulsive to us."
But Labour MP Keith Vaz, chairman of the Commons Home Affairs Committee, told the programme: "I think you will find widespread support in Westminster, in the country and from the Muslim community that the Home Secretary has done absolutely the right thing."
Shadow home secretary Chris Grayling said: "We have long argued that Islam4UK should be banned, so we welcome this decision.
"We cannot permit any group which propagates the views of banned international preachers of hate and organises hate-filled public protests to operate in Britain.
"Now ministers need to look at how they are going to ban other groups in the UK which are part of broader international networks of extremism."
Liberal Democrat home affairs spokesman Chris Huhne said: "Proscribing Islam4UK is playing into the hands of publicity-seeking Anjem Choudary and his odious followers.
"There is a real risk they will paint themselves as martyrs while simply changing their name and carrying on, or going underground."