Turkey's Constitutional Court decided to temporarily deprive the pro-Kurdish Peoples' Democratic Party (HDP), the country's third-largest political party, of public subsidies by freezing its bank accounts, a party spokesman told Agence France-Presse (AFP).
At the same time, the legal process continues which may lead to the suspension of the operation of the party with accusations of relations with the Kurdistan Workers Party (PKK), which Ankara accuses of being a terrorist organisation.
The Turkish regime accuses the HDP, a third force in the Turkish parliament, of "terrorism".
Threats have been made for months to shut the party, especially with presidential and parliamentary elections in Turkey coming up.
The HDP denies formal links to the PKK and accuses the government of targeting the party because of its strong opposition to Turkish President Recep Tayyip Erdoğan.
Thousands of supporters and dozens of its current and former officials currently languish in jail on highly contentious charges that have strained Turkey's relations with leading main allies in the West.
The party compared Thursday's court ruling to an illegal seizure of assets and vowed to win in the polls.
"This decision, which aims to prevent a fair and democratic election process and to ignore the will of the voters, neither prevents our loss of power nor our greater victory," it said a statement.
Emma Sinclair-Webb of Human Rights Watch of said the decision offered more proof "that Erdoğann's government uses courts to disadvantage, remove and punish the political opposition".
The HDP's future could play a major role in deciding Erdoğan's success in parliamentary and presidential elections that pose one of the stiffest challenges of his two-decade rule.
Turkey's constitutional court is hearing a prosecutor's request to ban the party before the vote.
Chief prosecutor Bekir Şahin is due to argue his case in court on Tuesday.
The court will then have the option of either dissolving the party or banning some of its members if it rules against the HDP.
Turkish media reports say the party was due to receive 539 million liras ($29 million) in treasury funding this year.
The party holds 56 of parliament's 579 seats and usually votes together with other opposition parties.
An HDP party spokesman told AFP that the party's only other source of revenue is supporter donations.
The spokesman could not immediately say what percentage of the party's funding comes from the state.
Thursday's ruling came less than a month after another court banned Istanbul's popular opposition mayor Ekrem İmamoğlu from politics.
Ekrem İmamoğlu has emerged as one of the more likely opposition figures to beat Erdoğan in a head-to-head race.
The mayor will hold on to his job while the ruling is appealed.
But he would have to resign if he were elected and his political ban was upheld.
READ MORE: Mitsotakis decides elections in Greece "looking" at Turkey, claims Hürriyet.
