The Home Secretary has now concluded that the statutory test is not met, and that there is insufficient information that the ISYF is currently concerned in terrorism and so their application should be granted.
Last night a spokesman for the ISYF said: "We have always argued that we are not terrorists and that we have a legal right to call for self-determination for the Sikh nation.
Some ISYF members were accused of plotting to assassinate former Indian Prime Minister Rajiv Gandhi, above, in 1985.
Wolverhampton South East MP Dennis Turner said Mr Straw had advised the ISYF to appeal against the ban and admitted that the organisation could have suffered because of a few 'renegade members'.
He said: 'The ISYF has done a lot of charity work in the Midlands and it speaks on behalf of a sizeable number of Sikhs in the community.
The ISYF does a good job in improving community spirit and helping local youngsters,' he said.
Prime Minister Tony Blair meeting ISYF members at the ICC
The ISYF is a peaceful lobbying group which collects funds to help those families that have fallen victim to an oppressive Indian government regime.
Mr Gill told us Mr Balir had been very polite in addressing him as 'Mr President' and seemed to take an interest in ISYF activities and cause.
She said: 'I have been very close to the situation in Punjab for the last few years and have attended several of the ISYF conferences in the UK and also visited the Punjab.
I am amazed that nobody at the Home Office ever advised me of their fears about the ISYF or warned me to steer clear of its members.
The Punjab has quietened down over the last few years so I don't know why the government has decided to target the ISYF now.