The UK Government is to freeze all assets held by an Islamic group suspected of involvement in the Bali nightclub bomb.

Jemaah Islamiah (JI) is also to be added to a list of banned terrorist groups in the UK.

The group is thought to be behind the 12 October attack in Bali which killed at least 190 people.

Eleven Britons are confirmed dead with another eight presumed killed and a further 13 still missing.

The US has already frozen JI assets after listing it as a terrorist group.

On Thursday, Chancellor Gordon Brown and Home Secretary David Blunkett presented a report setting out progress made in the past year towards combating terrorist financing.

No business

Mr Brown ordered British banks to freeze the assets of the group and told financial institutions in the UK not to conduct business on behalf of the organisation.

Mr Blunkett said JI is to be added to a list of banned terrorist groups in the UK.

"I will respond to a Parliamentary Questions announcing that we are laying an order to proscribe Jemaah Islamiah and we will debate that next week in the House of Commons," said Mr Blunkett.

BBC defence correspondent Paul Adams said: "The government has yet to spell out the case against Jemaah Islamiah, but it's clearly heard enough already."

Abu Bakar Ba'asyir denies links with terrorism

Treasury officials say the decision has been triggered by moves at the United Nations to add Jemaah Islamiah to its long list of organisations and individuals under sanctions for their ties to al-Qaeda and the Taleban.

However, although the US has acted, the State Department said a link with al-Qaeda had not yet been conclusively established.

In its report, the Treasury and Home Office outlined the steps taken since the 11 September attacks to cut off funds to terrorist groups.

The report acknowledges that while more than $100m has already been frozen worldwide recent events in Bali show that more needs to be done.

The bombing is said to have similarities to attacks by a suspected leading figure in JI known as Hambali, South-East Asia's most wanted man.

Police are still waiting to interview JI's alleged leader, Abu Bakar Ba'asyir, who is currently in hospital, over a string of bombings in Indonesia two years ago.