Belgium's highest court has ruled that the Flemish far-right Vlaams Blok party is racist.
Blok president Frank Vanhecke has plans to launch a new party
The ruling means the Blok will lose access to state funding and access to television which will, in effect, shut down the party.
The Blok was appealing against a court ruling which stated that it was guilty of violating anti-racism legislation.
Recent opinion polls suggest the Vlaams Blok is the most popular party in the Dutch-speaking region of Flanders.
It garnered almost a quarter of votes in regional and European elections in June.
The party campaigns on an anti-immigration platform.
It also wants independence for Flanders, home to six million Dutch speakers.
Party chairman Frank Vanhecke said he was shocked at the ruling.
"Exactly 15 years after the Berlin Wall came down and the
people of East Germany and eastern Europe regained their
freedom, it was confirmed today that in the Belgian state,
democracy and freedom of speech are under threat," he said.
Vlaams Blok's leaders were prepared for the ruling, and are making plans to launch a new party with a new name, Vlaams Belang, or Flemish Interest, Belgian media say.
The High Court's ruling is final and cannot be appealed.
"In order to preserve our party members from prosecution, we are
now forced to disband," said Mr Vanhecke immediately after the judgment.
"Today, our party has been killed, not by the electorate but by the judges."
The party had been toning down some of its statements, but there is every chance the new party will pick up where the old one left off, says the BBC's Chris Morris in Brussels.
At the weekend, its members voted to modernise the party's statutes and tone down its views on immigration, saying non-European immigrants wishing to remain in Belgium should adopt Belgian rules and values.
The Blok had once advocated that all non-European immigrants should be returned to their home country.
The Vlaams Blok makes the political establishment in Brussels very uncomfortable as they regard it as extremist and xenophobic, our correspondent adds.
For years, other parties have combined to shut it out of national and regional governments, but this tactic has not really worked, he says.
"We are the democratic voice of an ever growing number of Flemings who, in an entirely non-violent way, want to put an end to Belgium," Mr Vanhecke said on Tuesday.
"Our electoral strength is causing panic amongst the Belgian establishment. We will establish a new party. This one Belgium will not be able to bury; it will bury Belgium."