Israeli occupation bans Sheikh Raed Salah's Islamic Movement
They seized cash, documents and computers.
"Any person who belongs to this organisation or who provides services to it or who acts within its framework is henceforth committing a criminal offence punishable by a prison sentence," a government statement said.
The northern branch of the Islamic Movement, based largely in northern Israel, rejects the Oslo peace accords between Israel and the Palestinians and boycotts national elections on the grounds that they give legitimacy to the institutions of the Jewish state.
Al-Araby al-Jadeed has also learned Youssef Awawdeh, head of the movement's foreign relations, was among those arrested.
The government accused the movement's northern branch of stoking a wave of violence across Israel and the Palestinian territories that has left 12 Israelis dead since October 1 and 82 on the Palestinian side, one of them an Arab Israeli.
Islamic Movement and the intifada
The unrest was preceded by disturbances at the al-Aqsa Mosque compound in September triggered by fears that Israel wants to change longstanding rules that allow Jews to visit but not pray at the site, which they revere as the Temple Mount, the holiest of their faith.
The Israeli government has repeatedly denied any plans to change the rules.
"The northern branch of the Islamic Movement has carried out a campaign of incitement to violence for years based on the lie that 'The al-Aqsa Mosque is in danger' and false accusations that Israel wants to harm the mosque and violate the status quo," the government statement said.
"These activities have provoked a significant rise in tensions at the Temple Mount."
For the past 20 years, the Islamic Movement's wing, led by Sheikh Raed Salah, has held an annual conference under the slogan "al-Aqsa is in danger", warning that Jews plan to destroy it to build a third temple in its place.
According to biblical tradition, the first and second Jewish temples were located at the site of the al-Aqsa compound and destroyed by the Babylonians and the Romans.
Last month, Sheikh Raed Salah, was sentenced to 11 months in jail on charges of inciting violence at the mosque compound in a 2007 speech.
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Sheikh Raed Salah issued a statement of which al-Araby al-Jadeed obtained a copy.
Sheikh Salah reacts
He said: "Following these unjust arbitrary measures, I stress that the Islamic Movement will endure and continue its mission, upholding all the inalienable principles for which it was established, led by the issues of Jerusalem and al-Aqsa."
Salah's statement continued: "I will seek by all legitimate means, locally and internationally, to lift this injustice."
The Israeli move marks a new escalation against Palestinian political movements in Israel.
Recently, the Israeli government has been also targetting Members of Knesset from the Arab-dominated National Democratic Assembly [Balad] such as Hanin Zoabi, on the back of their support for Palestinian protests in the West Bank and Jerusalem.