Members of the Iranian revolutionary guard march during a parade to commemorate the anniversary of the Iran-Iraq war, Tehran, Sep 22, 2011. REUTERS/Stringer/File Photo

Iran has warned it will take reciprocal action against Washington for its move against the Guards, the country's most powerful security organisation.

It is the first time the United States has formally labelled another country's military a terrorist group.

"The IRGC is the Iranian government’s primary means of directing and implementing its global terrorist campaign," Trump said in a statement.

The designation "makes crystal clear the risks of conducting business with, or providing support to, the IRGC," Trump said. "If you are doing business with the IRGC, you will be bankrolling terrorism."

Israeli Prime Minister Benjamin Netanyahu on Monday lauded the decision, saying Trump had responded to a "request of mine."

"Thank you, my dear friend, US President Donald Trump, for having decided to declare Iran's Revolutionary Guards a terrorist organisation," Netanyahu said in a statement a day ahead of Israeli elections in which he is seeking a fifth term.

"Thank you for responding to another important request of mine, which serves the interests of our countries and countries of the region."

Critics have warned that the move could open US military and intelligence officials to similar actions by unfriendly governments. The US has already blacklisted dozens of entities and people for affiliations with the IRGC, but not the organisation as a whole.

Secretary of State Mike Pompeo, a strident critic of Iran, has pushed for the change in US policy as part of the Trump administration's tough posture toward Tehran. Pompeo told a news conference the designation will take effect in one week.

The announcement comes shortly before the first anniversary of Trump's decision to pull out of a 2015 nuclear deal with Tehran and to reimpose sanctions that had crippled Iran's economy.

After reports of the designation emerged late on Friday, Iran warned it will take reciprocal action.

"We will answer any action taken against this force with a reciprocal action," a statement issued by 255 out of the 290 Iranian lawmakers said, according to IRNA.

Set up after the 1979 Islamic Revolution to protect the Shi'ite clerical ruling system, the IRGC is Iran's most powerful security organisation. It has control over large sectors of the Iranian economy and has a huge influence in its political system.

The IRGC is in charge of Iran's ballistic missiles and nuclear programmes. Tehran has warned that it has missiles with a range of up to 2,000km, putting Israel and US military bases in the region within reach.

In 2007, the US Treasury designated the IRGC's Quds Force, its unit in charge of operations abroad, "for its support of terrorism," and has described it as Iran's "primary arm for executing its policy of supporting terrorist and insurgent groups".

VNF/Reuters/AFP