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The International Union of Muslim Scholars (IUMS) said it would pursue legal action in Europe and the United States, claiming its reputation had been harmed due to the listing by Saudi Arabia, the UAE, Egypt and Bahrain. 

The four Arab states are locked in a political feud with Qatar, now in its sixth month, over allegations Doha supports Islamist extremism and is too close to Saudi arch-rival Iran. 

Qatar denies the allegations, but the deep-rooted crisis has threatened to destabilise the Gulf.

"There will be a legal request to the responsible authorities in America and Europe to file legal claims to restore and compensate for the harm they caused us because they damaged our reputation," IUMS secretary general Ali al-Qaradaghi said, referring to the four Arab countries blockading Qatar.  

The organisation would "not stay silent" and that the terror list was not recognised by the United Nations, Qaradaghi added.

The IUMS has rejected "extremist ideologies that have tried to hijack and distort our peaceful religion", he said.

"We […] have had enough of extremist groups; we have had enough of those individuals who claim to be more righteous than everyone else.

"We have also had enough of scholars controlled by the whims of political rulers," Qaradaghi said.

Saudi Arabia and its allies in the Qatar boycott placed IUMS on a "terrorism" list late last month, saying the organisation promoted "terrorism by using Islamic rhetoric as a cover to facilitate terrorist activities".

During a press conference earlier on Friday, the IUMS strongly condemned the move by the Saudi-led bloc.

"Since it was established, the IUMS has stood as a bulwark against terrorism and extremism and has consistently advocated for the principles of freedom, justice and equality," the group said.

"The union sees this move as an attempt to undermine the religious and scholarly standing of an institution that represents some 90,000 Muslim scholars and hundreds of millions of Muslims worldwide".

Agencies contributed to this report.