The move came after a court last month ordered the dissolution of the Brotherhood and the confiscation of its properties, in addition to banning its activities.
A government panel headed by Minister of Social Solidarity Ahmed El-Borai has annulled the status of the Brotherhood as a registered NGO, Al-Ahram's Arabic news website reported.
The ruling came amid intensified crackdown on the group as Islamists have refused to bow down on their demand seeking reinstatement of Egypt's first democratically elected president Mohammed Morsi after he was deposed by the army on July 3.
Yesterday, the Brotherhood appealed the court verdict to seize its funds.
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The Brotherhood has existed outside of Egyptian law for decades and was only formally registered as an NGO in March 2013.
Egypt's State Commissioners Authority, a body that advises the government on legal issues, recommended yesterday the dissolution of the Freedom and Justice party - the political wing of the Muslim Brotherhood.
Morsi, who also belongs to the Brotherhood, was removed from power after millions of Egyptians took to the streets against his rule.
But the army-backed government have launched a massive campaign which has left at least 1,000 Muslim Brotherhood supporters dead while nearly 2,000, including the top leadership, have been jailed.
On Sunday, at least 57 people were killed in clashes between security forces and Morsi supporters and nearly 400 were injured.