By Andrew Quinn and Mark Hosenball
WASHINGTON (Reuters) - The United States has decided to remove the Iranian dissident group Mujahadin-e Khalq (MEK) from its list of terrorist organizations, U.S. officials said on Friday, handing a political victory to a group once sheltered by Iraqi leader Saddam Hussein that claims to have abandoned its violent past.
The officials said U.S. Secretary of State Hillary Clinton had made the decision to remove MEK from the list, and that it was expected to be formally announced in coming days.
The State Department said that Clinton sent a classified communication to Congress on Friday regarding the future status of the MEK, part of the formal notification process that would accompany removal from the terrorism list.
"I am not in a position to confirm the contents of this, because it's classified, but we anticipate being able to make a public announcement about it sometime before October 1," State Department spokeswoman Victoria Nuland said.
Lawyers who have argued the MEK's case in the courts and before the State Department could not immediately be reached for comment.
The U.S. decision comes after years of intense lobbying by the MEK, which had seen many of its members stranded in Iraq even as the group fell out of Baghdad's favor after Saddam's downfall.
The group marshaled the support of dozens of members of Congress as well as notable political, government and media figures.
A Paris-based spokesman affiliated with the group had not yet received official notification from Washington, but indicated the prospective de-listing could fuel the MEK's hopes of playing a role in the future of Iran.
"Revoking this designation is the first step to rectify the misguided and disastrous policy of appeasing the religious fascism ruling Iran," Shahin Gobadi said in an email message, calling the MEK designation "a major obstacle to regime change" in Iran.
DEPARTURE FROM CAMP ASHRAF
The United States had repeatedly said its decision on the MEK's terrorist designation hinged partly on the group's remaining members leaving Camp Ashraf, an Iraqi base where they had lived for decades, and moving to a former U.S. military base in Baghdad from which they were expected to be resettled overseas.
Officials said this week that the final large group of dissidents had moved from Camp Ashraf to the new location, ending a long standoff with Iraqi authorities.
The group, also known as the People's Mujahideen Organization of Iran, calls for the overthrow of Iran's clerical leaders and fought alongside Saddam's forces in the Iran-Iraq war in the 1980s. It also led a guerrilla campaign against the U.S.-backed Shah of Iran during the 1970s, including attacks on American targets.
Critics of the group have accused it of maintaining cult-like discipline and demanding absolute loyalty to its Paris-based top leadership.
The United States added the MEK to its list of foreign terrorist organizations in 1997. But the group has since said it renounced violence and mounted a vigorous legal and public relations campaign to have the designation dropped.
Public figures who have endorsed the MEK's campaign included former CIA directors R. James Woolsey and Porter Goss, former Homeland Security Secretary Tom Ridge, former FBI Director Louis Freeh, and Mitchell Reiss, a former State Department official who is a top foreign policy adviser to Republican presidential candidate Mitt Romney.
Prominent Democratic Party figures who have supported the MEK have included former Pennsylvania and Vermont Governors Ed Rendell and Howard Dean. People familiar with its activities said that the MEK had paid generous fees to some of the notables who made speeches in support of its de-listing
U.S. Representative Dana Rohrbacher, a California Republican who is one of the group's strongest supporters on Capitol Hill, said Clinton's decision would send a signal to Iran's religious leadership.
"The MEK are Iranians who desire a secular, peaceful, and democratic government. Nothing threatens the Mullah dictatorship more than openness and transparency," he said in a statement.
The MEK surrendered weapons to U.S. forces after the 2003 invasion of Iraq.
The fate of its remaining members in the country has been in question since Iraq took over the Camp Ashraf from U.S. forces in 2009 under a bilateral security pact. Clashes between Camp Ashraf residents and Iraqi security forces last year killed 34 people.
(Reporting By Mark Hosenball and Andrew Quinn; Editing by Vicki Allen)