The decision follows the group's vandalism of two planes at RAF Brize Norton, an incident currently under investigation by counter-terror police.
Metropolitan Police Commissioner Sir Mark Rowley said he was “shocked and frustrated” by a planned protest supporting Palestine Action, labelling the outfit an organised extremist criminal group.
Proscribing Palestine Action would make it a criminal offence to belong to or support the group, carrying a maximum sentence of 14 years in prison.
Palestine Action justifies its actions by stating the UK has failed to prevent genocide, while critics and supporters hold differing views on the legitimacy of the ban.