British Home Secretary Sajid Javid says he took a decision to proscribe the group for "its attempts to destabilise the fragile situation in the Middle East."
Britain said on Monday it would ban Hezbollah, adding the Lebanese Shia group in its entirety to its list of banned terrorist organisations.
"Hezbollah is continuing in its attempts to destabilise the fragile situation in the Middle East – and we are no longer able to distinguish between their already banned military wing and the political party," Home Secretary Sajid Javid said.
"Because of this, I have taken the decision to proscribe the group in its entirety."
Hezbollah and Lebanon didn't immediately comment on the decision.
Group controls 30 ministries in cabinet
Hezbollah, an armed group backed by Iran and listed as a terrorist organisation by US controls three of the 30 ministries in Prime Minister Saad al Hariri's new cabinet, the largest number it has ever held.
They include the health ministry, which has the fourth-largest budget in the state.
Backs regime in Syria
Hezbollah last fought a major war with Israel, its life-long enemy, in 2006.
Its regional clout has expanded through deployments of fighters to other Mideast conflicts, including the war in neighbouring Syria, where it has fought in support of regime leader Bashar al Assad.
Together with groups and individuals that see its arsenal as an asset to Lebanon, Hezbollah won more than 70 of the 128 seats in parliament in an election last year.
Hariri, who is backed by the West, lost more than a third of his MPs.
Israel hails decision
Israel lauded Britain's decision and urged the European Union likewise to class Hezbollah and its political movement in its entirety as a "terrorist" organisation.
"All who truly wish to combat terror must reject the fake distinction between 'military' & 'political' wings," Israeli Security Minister Gilad Erdan said in a tweet thanking his British counterpart, Sajid Javid.
"Now is the time for the #EUto follow suit!"