The Islamist group Islam4UK, which planned a march through Wootton Bassett, and its "parent" organisation, al-Muhajiroun, will be banned under new legislation outlawing the "glorification" of terrorism, Alan Johnson announced today.

The order, which will come into effect on Thursday, will make it a criminal offence to be a member of either of the groups, punishable by up to 10 years in prison.

"I have today laid an order which will proscribe al-Muhajiroun, Islam4UK, and a number of the other names the organisation goes by," Johnson said. Other names are Call to Submission, Islamic Path and London School of Sharia. The group is already proscribed under two other names – al-Ghurabaa and the Saved Sect or the Saviour Sect.

Johnson said that proscription was "a tough but necessary power to tackle terrorism", adding that it was "not a course we take lightly".

The decision, based on months of monitoring the output of websites and comments by senior figures, will have to be endorsed by parliament. Al-Muhajiroun was founded by Omar Bakri Muhammad and Anjem Choudary, and has been operating in Britain since the mid-1980s.

The group became notorious for praising the September 11 attacks in 2001. Bakri was banned from Britain by the former home secretary Charles Clarke in August 2005, on the grounds that his presence in the country was "not conducive to the public good".

At the same time, the Home Office announced its intention to ban the group but it disappeared from view before relaunching itself in June last year.

The Saviour sect and al-Ghurabaa were proscribed under the 2000 Terrorism Act.

Islam4UK has called off its planned march through Wootton Bassett, the Wiltshire market town that has come to symbolise the fatalities sustained by British forces in Afghanistan.

It said it had "successfully highlighted the plight of Muslims in Afghanistan globally".

The group said that if their organisation and al-Muhajiroun were banned, "another platform with a new name will arise to continue to fulfil these divine objections until the sharia has been implemented".

Counterterrorism legislation passed in 2006 is designed to automatically ban any "successor" organisations set up by proscribed groups.

Home Office lawyers are drawing up the necessary parliamentary order implementing the ban so it can be debated by MPs within days.

The move came as MPs heard evidence of tensions within government over the direction of the official programme aimed at preventing violent extremism.

Written evidence from the Local Government Association (LGA) for a special Commons select committee held in a Birmingham mosque yesterday, confirmed that tension between the Home Office's office of security and counterterrorism and the Department of Communities and Local Government had been a problem at times.

The LGA said the heart of the disagreements had been the focus of the Prevent programme, with the communities secretary, John Denham, arguing that it should be part of the broader work on community cohesion and equalities. "Police and the security services will necessarily see things in a different perspective," an LGA memo said.

Its evidence said that the security services have moved away from developing a profile of a "typical extremist", to a more rounded analysis of potential risks and interventions.

Evidence from the Association of Chief Police Officers to the MPs' inquiry said that so far 228 young adults aged under 25 "who have been inspired by the al-Qaida ideology" have been referred to the Channel Project, which provides support to those believed to be vulnerable to radicalisation.