-The State Department has decided to remove the Iranian exile group Mujaheddin-e Khalq from the U.S. government’s terrorist list, officials said Friday, ending a decade-long fight over a controversial organization that had become a favorite cause of prominent U.S. politicians and lobbyists.

The decision, detailed in classified documents prepared for submission to Congress, is a victory for U.S. allies of the onetime militant group, known as the MEK, which is fiercely opposed to Iran’s clerical regime. But the move could further complicate U.S. diplomatic engagement with Tehran, which bore the brunt of the MEK’s campaign of bombings and assassinations in the 1970s and ’80s.

The action comes two weeks before a court-ordered deadline to resolve the MEK’s status and just six days after the dissident group vacated its former enclave in eastern Iraq, averting a feared confrontation with Iraqis who want the exiles out of the country. More than 3,000 MEK members have remained in Iraq since the U.S.-led invasion in 2003, unwanted by their host country and fearful of imprisonment or worse if they return to Iran.

State Department officials declined to comment on the decision, but spokeswoman Victoria Nuland confirmed that the department “was in the process of sending a classified communication” to Congress about the MEK’s status. Two senior Obama administration officials privy to sensitive policy discussions confirmed the department’s intention to rescind the MEK’s terrorist label, a rare step that is used to reward organizations that renounce violence and embrace political engagement.

The State Department’s list of foreign terrorist organizations currently comprises 52 groups. U.S. citizens are banned from offering aid or advice to groups on the list.

Despite those restrictions, a large number of political heavyweights have spoken publicly on the MEK’s behalf, including former Republican presidential candidates Rudy Giuliani and Newt Gingrich and former Democratic National Committee chairmen Howard Dean and Edward G. Rendell. Powerful congressional leaders also argued for dropping the terrorist designation to reward the MEK for renouncing violence and providing intelligence to Western governments about Iran’s nuclear program.

Supporters argued that they are acting legitimately to facilitate U.S. policy decisions.

“The MEK are Iranians who desire a secular, peaceful, and democratic government,” Rep. Dana Rohrabacher (R-Calif.), chairman of the House Foreign Affairs subcommittee on oversight and investigations, said in a statement Friday. “Nothing threatens the Mullah dictatorship more than openness and transparency.”

Some U.S. officials and policy experts oppose the move, saying any U.S. support for the MEK undercuts America’s image inside Iran, where many ordinary Iranians view the group as a terror cult.

“The United States just shot itself in the foot by giving [Iranian supreme leader Ali] Khamenei this gift that will help him shift the balance of anger towards the U.S.,” said Trita Parsi, author of “A Single Roll of the Dice,” a book on U.S. policy toward Iran.