"Each time there is such a decision by the colonialists, we consider it a medal, an honour which attests that we are on the right path for our people," Nasrallah said in a press conference via videolink held at a secret venue.

"But the timing is suspect because it coincides with a prisoner swap," he said, referring to an agreement that will involve Israel releasing five Lebanese and the remains of Hezbollah members in exchange for the bodies of two Israeli soldiers captured in a cross-border raid two years ago.

Britain moved to ban the entire military wing of the Shiite fundamentalist movement, adding it to its blacklist of terrorist groups, making it a criminal offence to belong to, raise funds or encourage support for the group's military wing.

The interior ministry said it took the action because Hezbollah's military branch was supporting militants in Iraq and Palestinian terror groups.

London has already banned Hezbollah's External Security Organisation (ESO), which it considers the group's "terrorist wing".

Nasrallah said the timing of the latest British ban was aimed at damaging "the human and civilised image that the exchange of prisoners (with Israel) gives to the (Hezbollah) resistance."

The decision was also "not a surprise ... since it comes from a founding state of the Zionist entity," he said, referring to the British-mandated Palestine were Israel was established in 1948.

Last October, Germany and the International Committee of the Red Cross negotiated a swap under which Israel handed over a Hezbollah prisoner and the remains of two guerrillas, and Hezbollah returned the body of an Israeli.

A controversial part of the new accord is the release of Lebanese prisoner Samir Kantar, a Palestine Liberation Front militant serving a 542-year sentence for killing two men and a four-year-old girl in a 1979 raid on northern Israel.

The brutality of that attack horrified Israel.

On Tuesday, Lebanese Prime Minister Fuad Siniora said the new swap amounted to a "huge failure" for the Jewish state and a victory for Hezbollah, which stood up to the might of the Israeli army for 34 days in the summer of 2006. -AFP