The action naming the Open Singapore Centre (OSC) and the Think Centre, which are registered as businesses, was taken under the Political Donations Act.

"An organisation which is not registered as a political party but carries out activities to influence the domestic political process should logically also be prohibited from accepting donations," the government said in a statement on Mar 30.

Singapore's ruling People's Action Party has been accused by opposition members and some Western critics of a legal system structured to place the opposition at a disadvantage.

James Gomez, executive director of the Think Centre, which has 20 paying members, told a news conference he welcomed the change of status as an "honour."

"We're seriously considering...about contesting the next election... given now that we're a political association and we have to have open accounting just like a political party."

However, Gomez was unsure if the group's new status would permit it to run for elections under Singapore law.

The law on political donations was enacted in February ahead of general elections due in the city-state by August 2002.

"Section 2 of the Act provides for the Ministry of Home Affairs to gazette an organisation for the purpose of the Political Donations Act so long as its objects or activities relate wholly or mainly to politics in Singapore," the government statement said.

"This legislation is an opportunity provided to look into the coffers of the Think Centre," Gomez said, referring to the government. "They won't find much."

He added that the Think Centre's funds were raised entirely through its own activities.

Police warned Gomez and OSC programme coordinator Kevin Liew on Mar 27 for having organised a rally at Singapore's lone public soapbox last December without a permit. The citystate requires all organisations to have a permit to gather in public.

The rally aimed to urge the government to abolish the Internal Security Act, which allows detention without trial.

Liew was not immediately available for comment.

Some members of the two groups have been among those who tried unsuccessfully over the past month to hold a rally to raise funds to save the career of veteran politician J.B. Jeyaretnam, which is threatened by bankruptcy.

Jeyaretnam, an outspoken critic of the Singapore government, stands to lose his parliamentary seat if he is defeated in the final stages of a series of protracted legal actions which led to his bankruptcy.