Masked and heavily armed French police raided the offices Tuesday of an Iranian opposition group accused of links to terrorism, detaining 165 people and seizing $1.3 million, the government said.

The interior minister said the raids were motivated by evidence that France was becoming a major operations center for the group, whose Iraq-based military wing was disarmed by U.S. forces.

On orders of France's leading anti-terrorism judge, about 1,300 police poured into the streets and knocked down doors of offices of the Mujahedeen Khalq (search) in a vast sweep of sites north and west of Paris.

Police also seized computer material and sophisticated transmission systems, an investigator said, speaking on condition of anonymity.

The Mujahedeen Khalq has been allowed to operate openly in France for about 20 years. Judicial officials said the raids, on offices housing the group's political arm, had been planned for a month.

The action came as pro-democracy demonstrators in Iran have become emboldened and as Europeans urge Iran to open its nuclear sites to international inspections.

Tehran had complained that Western nations were allowing the Mujahedeen to operate freely while, at the same time, accusing Iran of links to Middle East terrorist organizations.

The Mujahedeen's Iraq-based military wing was disarmed by U.S. forces in May under a surrender agreement after the fall of Saddam Hussein. The well-armed National Liberation Army of Iran (search) had used neighboring Iraq to mount operations against Iran in an effort to topple the Islamic Republic.

Interior Minister Nicolas Sarkozy (search) said France had become an increasingly important base for the Mujahedeen, particularly after their setback in Iraq.

The organization "recently wanted to make France its support base, notably after the intervention in Iraq," he told lawmakers. "We cannot accept that."

The group, also called the People's Mujahedeen of Iran (search), was declared a terrorist organization by the European Union in May 2002. The United States also labels it a terror group.

Among those detained were Maryam Rajavi, wife of Mujahedeen leader Massoud Rajavi (search), who is based in Iraq, and Saleh Rajavi, Massoud's brother, judicial officials said.

The raids were carried out on the orders of French anti-terrorism Judge Jean-Louis Bruguiere for "criminal association aimed at preparing terrorism acts and for financing a terrorist enterprise," the Interior Ministry said.

The group's Paris offices "are considered organizational, logistical and operational bases of questionable financing," a ministry statement said.

The money — in $100 bills — was found stashed in a villa in Auvers-Sur-Oise, north of Paris, where the group kept its headquarters, police said. The sweep included buildings in the Yvelines region west of Paris.

Of 165 people rounded up, 159 were kept for questioning, police said.

The Mujahedeen denounced the action.

"The individuals arrested in the unjustifiable raids this morning were all in France legally and had not conducted any illegal activity whatsoever," Mujahedeen spokesman Ali Safavi said by telephone from London.

"They have churned out these lies to justify this act which is only to the satisfaction of the terrorist regime that rules Iran," he said.

French judicial officials opened an investigation into possible terrorist links by the group in 2001. However, the prosecutors office only added "financing a terrorist enterprise" to the dossier last week, according to judicial officials. It was not immediately clear what prompted the addition.

It was the first time since the EU named the group a terrorist organization that French authorities moved to detain members.

Safavi, the group's spokesman, claimed French police had been protecting it for 22 years "because the Mujahedeen are the No. 1 terrorist target of the Iranian regime."

The Mujahedeen have been based in France since shortly after the 1979 Islamic revolution that toppled the Iranian monarchy and brought Ayatollah Ruhollah Khomeini to power. The group initially supported the revolution but fell out with the government, advocating a secular state. It now has offices in several Western cities.

Group leader Rajavi was expelled from France to Iraq in 1986 as the French government was trying to improve relations with Iran and help win freedom for nine French hostages in Lebanon. He then set up the army in Iraq.