Donald Trump has designated Iran’s elite Islamic Revolutionary Guard Corps (IRGC) a foreign terrorist organisation – the first time the US has formally done so with a country’s military.

The US had already blacklisted dozens of people and entities with alleged connections to the IRGC.

“This unprecedented step, led by the Department of State, recognises the reality that Iran is not only a State Sponsor of Terrorism, but that the IRGC actively participates in, finance, and promotes terrorism as a tool of statecraft,” Mr Trump said in a White House statement.

“The IRGC is the Iranian government’s primary means of directing and implementing its global terrorist campaign.”

The designation “makes crystal clear the risks of conducting business with, or providing support to, the IRGC,” Mr Trump continued. “If you are doing business with the IRGC, you will be bankrolling terrorism.”

Secretary of state Mike Pompeo, a strident critic of Iran, has pushed for the change in US policy as part of the Trump administration’s tough posture towards Tehran. He said the move will take effect next week.

The designation imposes sanctions including freezing assets the IRGC may have in US jurisdictions and a ban on Americans doing business with the organisation.

After the decision, Iran labelled the US military a “supporter of terrorism”.

In an announcement signalling it would reciprocate the move, Tehran accused Washington of posing a threat to peace.

In an indignant response reported by state TV, Iran’s Supreme National Security Council said: “This unwise and illegal measure is a major threat to regional and international stability and peace ... Iran labels the American regime as a supporter of terrorism.”

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The US decision allows it to to deny entry to people found to have materially supported the guard or prosecute them for sanctions violations. That could include European and Asian companies and businesspeople who deal with the guard’s many affiliates.

It will also complicate diplomacy. Without exclusions or waivers to the designation, US troops and diplomats could be barred from contact with Iraqi or Lebanese authorities who interact with guard officials or surrogates.

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The Pentagon and US intelligence agencies have raised concerns about the impact of the designation if the move does not allow contact with foreign officials who may have met or communicated with guard personnel.