DUBAI (Reuters) - Bahrain has revoked the citizenship of the spiritual leader of the kingdom’s Shi’ite Muslim majority, the state news agency reported on Monday, prompting protests outside his home and a sharp rebuke from an Iranian paramilitary chief.

The move against Ayatollah Isa Qassim comes less than a week after a court ordered Bahrain’s main opposition al-Wefaq group closed, accusing it of fomenting sectarian unrest and of having links to a foreign power, in an apparent reference to regional Shi’ite power Iran.

The move against Qassim was the latest one taken by Bahrain – where a Shi’ite majority is ruled by a Sunni monarchy – against Shi’ite figures in the country, in what appears to be an escalating campaign against dissent in the Western-allied Gulf kingdom.

Bahrain has defended its actions against Shi’ite Muslim figures in the context of national security.

Qassim could potentially face expulsion from the country.

A crowd of up to 4,000 people gathered outside Qassim’s house in the Shi’ite village of Diraz, west of the capital, Manama, to show their support for him, witnesses said.

In a bluntly worded reaction, the top commander of Iran’s Revolutionary Guards, Qassem Soleimani, warned the Bahraini government it would pay a price for its decision and suggested Bahrainis may respond with armed action.

“The Al Khalifa (rulers of Bahrain) surely know their aggression against Sheikh Isa Qassim is a red line and that crossing it would set Bahrain and the whole region on fire, and it would leave no choice for people but to resort to armed resistance,” Soleimani said in a statement published by Fars news agency.

Soleimani heads the Qods Force, the elite special forces arm of Iran’s Revolutionary Guards.

Iran’s Foreign Ministry also criticized the move.

In a statement published on the Tasnim news agency, the ministry urged the Bahraini government “not to burn all the bridges that connect the government to the people” and “to hold serious national talks to end the current crisis.”

Washington, which regards Bahrain as a top Gulf ally and is where the U.S. Fifth Fleet is based as a bulwark against Iran, said it was “alarmed” by the decision.

“We are unaware of any credible evidence to support this action,” State Department spokesman John Kirby said.

The United States and Britain have expressed concern about Bahrain’s human rights record.

Bahrain in 2011 crushed an uprising by Shi’ites demanding reforms that would give them a bigger voice in governing the Sunni Muslim-ruled country. Bahrain denies any discrimination.

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But discontent still smolders on the streets of Bahrain, where a financial crisis caused by lower oil prices has caused a slowdown in the economy.

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BNA, quoting an Interior Ministry statement, said Qassim had been trying to divide Bahraini society, encourage youths to violate the constitution and promote a sectarian environment in the country.

“Based on that, the Bahraini citizenship had been dropped from Isa Ahmed Qassim, who since he acquired Bahraini citizenship had sought to form organizations that follow foreign religious and political reference,” BNA said.

Qassim’s official website says he was born in a Shi’ite village in the kingdom in the 1940s, when the island state was still under British rule.

The crowds gathered outside Qassim’s house chanted Shi’ite slogans, witnesses said.

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“With our soul, with our blood we sacrifice ourselves for you, Hussein!” they chanted, invoking the name of the Prophet Muhammad’s grandson, Imam Hussein, who is revered by Shi’ite Muslims.

Social media footage showed Qassim standing outside what looked like his home saluting the crowds.

Dozens of police vehicles were seen surrounding Diraz, the witnesses said, but there were no reports of clashes.

HEZBOLLAH SAYS DECISION ‘DANGEROUS’

The powerful Lebanese Shi’ite group Hezbollah called Bahrain’s decision “extremely dangerous” and warned it would bring severe consequences to the ruling system.

“The authorities, with their stupidity and recklessness, are pushing the Bahraini people to difficult choices, which will have severe consequences for this corrupt dictatorial regime,” Hezbollah said in a statement.

Bahrain earlier accused the Iran-backed Hezbollah of supporting militants behind a spate of bombings in the country and has designated the group a terrorist organization.

The Bahrain Institute for Rights and Democracy said the withdrawal of Qassim’s citizenship would stoke unrest.

“We are deeply concerned that these actions will escalate tensions on the streets and may even lead to violence, as targeting the country’s leading Shi’ite cleric is considered to be a red line for many Bahrainis,” Sayed Ahmed al-Wadaei, the institute’s director of advocacy, said in a statement.

Bahraini media reported last week that authorities had been investigating a bank account of some $10 million in Qassim’s name.

The move spurred a strongly worded statement from top clerics, including Qassim, against any attempt to meddle with the collection of a Muslim tax called Khums, which is a pillar of Shi’ite Islam.