The move marked a major escalation in the army-backed government's campaign to suppress the Islamist movement that propelled Mohamed Mursi to the presidency 18 months ago but has been driven underground since the army toppled him in July. It gives the authorities the power to charge any member of the Brotherhood with belonging to a terrorist group, as well as anyone who finances the group or promotes it "verbally, or in writing." This is a turning point in the confrontation. This is an important tool for the government to close any door in the face of the Brotherhood's return to political life," said Khalil al-Anani, a Washington-based expert on the movement. Earlier on Wednesday, a Sinai-based militant group, Ansar Bayt al-Maqdis, had claimed responsibility for the attack that wounded some 140 people. In Washington, the State Department also condemned the attack but urged Egypt to have an "inclusive political process." We condemn in the strongest terms the horrific, terrorist bombing yesterday. There can be no place for such violence. The Egyptian people deserve peace and calm," State Department spokeswoman Jen Psaki said but added: "We also note that the Muslim Brotherhood in Egypt condemned the bombing shortly after it occurred yesterday. "We are concerned about the current atmosphere and its potential effects on a democratic transition in Egypt," she added. The Brotherhood, which estimates its membership at up to a million people, was Egypt's best organized political force until this summer's crackdown. A political and social movement founded in 1928, it won five elections after the downfall of President Hosni Mubarak in 2011. "The government decision aims to liquidate its political opponents," Mohamed Touson, a member of the Brotherhood's Freedom and Justice Party, told Al-Ahram online, a state-run news portal. Since Mursi's overthrow, the state has killed hundreds of his supporters in the streets and arrested thousands more. Mursi and other top Brotherhood leaders were last week charged with terrorism and plotting with foreign militants against Egypt. They could face the death penalty. A court ruling has also formally outlawed the group. Following Tuesday's attack, the Brotherhood's opponents took to the airwaves of the overwhelmingly hostile media to demand the group be declared terrorists. The government has declared itself in "a war on terror." Analysts say the government decision points to the influence wielded by hawks in security services. Though it has been outlawed for most of its existence, this marks the first time the group has been formally designated a terrorist movement. In a statement, the government said: "All of Egypt ... was terrified by the ugly crime that the Muslim Brotherhood group committed by blowing up the building of the Dakahlyia security directorate." The statement did not say what evidence the government had to back up the accusation or name any suspects. The government is pushing ahead with a political transition plan. A mid-January referendum is the next step, to be followed by parliamentary polls and a presidential election. Army chief Abdel Fattah al-Sisi is widely tipped to win, assuming he runs. The Brotherhood says it remains committed to peacefully resisting what it calls a bloody military coup against a freely elected leader. Its supporters are pressing a campaign of protest focused on university campuses. Anani said: "The only party that will benefit from this is the radical Islamists who will capitalize on the despair and disenchantment." Some observers have drawn parallels with Algeria, where a civil war erupted in 1991 when the army aborted an experiment with democracy because the Islamists looked set to win. We might witness another insurgency, an Algeria scenario. You might see the emergence of a violent faction in the Brotherhood," Anani said. Additional reporting by Tom Perry in Cairo and Douwe Miedema in Washington; Editing by Tom Perry and Sandra Maler