Britain's finance ministry on Friday said it had added Lebanon's entire Hezbollah movement to its list of terrorist groups subject to asset freezing.
The ministry previously only targeted the Shiite organisation's military wing but has now listed the whole group after the government designated it a terrorist organisation last March.
The change requires any individual or institution in Britain with accounts or financial services connected to Hezbollah to suspend them or face prosecution.
The group had "publicly denied a distinction between its military and political wings," the Treasury said in a notice posted on its website.
"The group in its entirety is assessed to be concerned in terrorism and was proscribed as a terrorist organisation in the UK in March 2019," it added.
"This listing includes the Military Wing, the Jihad Council and all units reporting to it, including the External Security Organisation."
Brian Hook, the US special representative for Iran, said the United States was "very pleased" with the decision, adding that it had long been seeking such a move from European allies.
"We would like to congratulate the United Kingdom," he told reporters in Washington. "There is no distinction between Hezbollah's political arm and its military arm."
The Treasury in London said the change followed its annual review of the asset freezing register, and brought it into line with the 2019 decision by the interior minister to blacklist all of Hezbollah.
"The UK remains committed to the stability of Lebanon and the region, and we continue to work closely with our Lebanese partners," a spokesman said.
Hezbollah is a Shiite militant movement established in 1982 during the Lebanese civil war by Iran's Revolutionary Guards.
Its capture of two Israeli soldiers in 2006 sparked a 34-day war in which 1,200 people were killed.
The group is seen as a key component of Shiite-majority Iran's strategy for regional influence.
Britain's move comes amid heightened tensions in the Middle East, after the US killed top Iranian general Qasem Soleimani in an air strike earlier this month.
Tehran retaliated by firing a volley of missiles at US troops stationed in Iraqi military bases.
Britain currently proscribes 75 international terrorist organisations under terrorism legislation passed in 2000.
A supporter holding the flag of Hezbollah, which the UK government designated as a terror organisation