LONDON  After a seven-year legal battle, Britain’s Court of Appeal ruled Wednesday that the British government was wrong to include an Iranian resistance group, the People’s Mujahedeen of Iran, on its list of banned terrorist groups.

Spokesmen for the group, whose name means People’s Holy Warriors, said the ruling appeared to leave Britain’s interior minister, Home Secretary Jacqui Smith, with no further legal recourse but to order Parliament to strike the group from a list of more than 20 proscribed terrorist organizations under Britain’s Terrorism Act.

The court’s ruling denied the government’s bid to carry the appeal further, seemingly closing off recourse to Britain’s supreme appellate body, the so-called Law Lords. But the British government did not say what it planned to do.

The People’s Mujahedeen has roots that go back to the Iranian resistance to Shah Mohammed Reza Pahlavi’s rule in the mid-1960s. After the 1979 revolution, Ayatollah Ruhollah Khomeini turned against the group, executing many of its members and driving others into exile. It regrouped in Iraq in the 1980s and was listed as a terrorist group by the United States in 1997 and the European Union in 2002.