Andrew Mango, Turkish affairs analyst: "Welfare already reforming" (2'41")

Turkey's judiciary dissolved Welfare because it said the party acted against the secular principles of the Turkish republic while in government.

The court banned the party leader, Necmettin Erbakan and several colleagues, from politics for five years.

Setback for Welfare party supporters

US State Department spokesman James Rubin said the affair had damaged confidence in Turkish democracy.

"As we have often said, the answer to many of Turkey's problems is to enhance democracy, to adopt reforms that would allow greater freedom of expression and wider political participation," he said.

The ruling has also drawn criticism from Britain, the current president of the European Union.

The EU was already unhappy with Turkey's human rights record and the BBC's correspondent in Ankara says this latest action will not help Turkey's case for membership.

Welfare was pressured out of power last June by the military after leading a coalition government for a year.

The BBC's Chris Morris reports from Ankara on the verdict (Dur 1'16)

Welfare officials have accused the state of over-reacting and of trying to victimise a party which has 150 seats in the Grand National Assembly and more than four million members.

The case, which has been deliberated for several weeks, is thought to be one of the most politically-sensitive judgements the constitutional court has ever been asked to make.

The attempts to increase the Islamic tenor of life in this predominantly Muslim country angered army generals.

Funds frozen

Expectations that a ban on Welfare could lead to early elections has weighed on Turkish shares in recent weeks and many brokers have discounted a closure decision.

Welfare leader Necmettin Erbakan: Forced out

Stocks were slightly higher on Friday.

In an unprecedented move earlier this week, the courts froze more than $5m of treasury aid due to Welfare as a precautionary measure in case the party was closed down.

The court ruling is only a temporary victory for opponents of the Islamic political movement.

The party is likely to be resurrected under a new name. But the seizure of assets and cash reserves could hurt its chances in the elections that may follow the court ruling.

It apparently was already in the process of being reformed under a new name, as it did after being closed twice before since 1970.

Mr Erbakan has said he will appeal against the decision to the European Court of Human Rights.