But so far they have failed to snuff out nationwide demonstrations demanding the reinstatement of Mursi, ousted by the army on July 3 after mass protests, or stem a rise in militancy, which culminated on Thursday in an attempt to assassinate the interior minister in Cairo.
The Brotherhood, sworn to peaceful protest, condemned the attack but urged its supporters to fill the streets of Egypt's towns and cities again on Friday, for the third time in eight days, to reject what it calls an army coup against democracy.
Authorities are pursuing the toughest crackdown in decades on the Brotherhood, Egypt's biggest political grouping.
Since July, they have killed more than 900 of Mursi's supporters and arrested most of the movement's leaders, including Mursi, on charges of murder or inciting violence against anti-Brotherhood protesters.
The symbolic move to cancel its legal status applies to the non-governmental organization registered by the Brotherhood in March as a defense against legal challenges.
The privately-owned Al-Shorouk newspaper said the decision would be taken within days, quoting Hany Mahana, spokesman for Social Solidarity Minister Ahmed el-Boraie.
The same official was quoted by the state-run Al-Akhbar newspaper as saying the decision had already been taken:
"The minister's decision has in fact been issued but it will be announced at the start of next week in a press conference."
Mahana could not be reached for comment, and a government official denied a decision had been taken.
BIGGEST AND OLDEST GROUP
The move to dissolve the NGO stems from accusations that the Brotherhood used its headquarters to fire and store weapons and explosives, Al-Akhbar reported, adding that the Brotherhood had failed to respond to the accusations.
The Brotherhood was founded in 1928 and formally dissolved by Egypt's then military rulers in 1954. It continued to be grudgingly tolerated as a mass movement, however, sending legislators to sit in parliament as independents. It says it has around a million members.
There has so far been no attempt to ban the Freedom and Justice Party, the political wing that the Brotherhood set up in 2011, after the overthrow of the veteran general-turned-president Hosni Mubarak.
Despite the arrest of most of the Brotherhood's leaders, its long-established grassroots network has still managed to bring thousands onto the streets, galvanized by the killing of hundreds of its supporters when security forces cleared protest camps in Cairo on August 14.
One of the authors of that operation, Interior Minister Mohamed Ibrahim, survived an assassination attempt on Thursday. A massive car bomb, almost certainly the work of a suicide bomber, blew up his convoy as he set off for work, and his armored car was riddled with bullets.
Staged in broad daylight, it was by far the boldest attack since Mursi's overthrow, and its size and sophistication showed the risk that Egypt's crisis could spawn a wave of Islamist attacks like those it experienced in the 1980s and 1990s.
Radical Islamists have already stepped up an insurgency in the Sinai Peninsula since Mursi was overthrown, and online calls from Islamists for an even more violent response have intensified since August 14.
Last Saturday, militants fired rocket-propelled grenades at a container ship as it passed through the Suez Canal in the eastern Sinai, a global trade route and one of Egypt's main remaining sources of foreign currency since the political turmoil of the last 2-1/2 years ravaged its tourist industry.
(This story has been corrected to clarify in third paragraph that bomb attack was on Thursday, not Friday)
(Writing by Kevin Liffey; Editing by Angus MacSwan)
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