The United States will remove a Jewish extremist group linked to late rabbi Meir Kahane as well as a Palestinian militant group from a terror blacklist after years without violence, an official said Sunday.

The State Department designated Kahane Chai as a foreign terrorist organization in 1997, three years after its supporter Baruch Goldstein massacred 29 Palestinians in the occupied West Bank city of Hebron.

The group was founded by Kahane, a US-born rabbi and former Israeli MP who advocated the expulsion of Arabs from Israel and was assassinated in New York in 1990.

The State Department informed Congress it will withdraw the designation, which was contested in court by the group, as Kahane Chai "has not been linked to a terrorist attack since 2005," an official said.

The official said the State Department was also delisting the Mujahidin Shura Council in the Environs of Jerusalem, a Palestinian jihadist group linked to rocket attacks a decade ago.

Revoking the designations "ensures our terrorism sanctions remain current and credible and does not reflect any change in policy towards the past activities of any of these the organizations," the State Department official said on condition of anonymity.

Despite the lack of attacks by Kahane Chai group, the late rabbi remains a hero for some on the extreme right of Israeli politics, including member of parliament Itamar Ben-Gvir who has advocated annexing the West Bank and hung a portrait of Goldstein in his home.

Designation as a foreign terrorist organization severely limits activities in the United States, including criminalizing financial support.

The State Department said it was still keeping the two groups on the less potent Specially Designated Global Terrorist list, which helps support law enforcement activities.