Bahrain has stripped the spiritual leader of the kingdom's Shia majority of his citizenship, state news agency BNA reported on Monday, and there were reports of a protest outside his house.

The move against Ayatollah Isa Qassim comes less than a week after a court ordered the country's main opposition al-Wefaq group closed, accusing it of fomenting sectarian unrest and of having links to a foreign power - an apparent reference to Iran.

The agency, citing an interior ministry statement, said Qassim had been trying to divide Bahrain society, encourage youths to violate the constitution and promoted a sectarian environment in the country.

‘Based on that, the Bahraini citizenship had been dropped from Isa Ahmed Qassim, who since he acquired Bahraini citizenship had sought to form organisations that follow foreign religious and political reference,’ BNA said.

The ayatollah's official website says he was born in a Shia village in the kingdom in the 1940s.

There were reports on social media of a crowd marching outside his house in the Shia village of Diraz west of the capital Manama. Video footage showed dozens of people chanting Shia slogans.

Bahraini media last week reported that authorities have been investigating a bank account of some $10 million in Sheikh Qassim's name to examine where it was getting funds and how they were being spent.

The move spurred a strongly worded statement from top clerics, including Sheikh Qassim, against any attempt to meddle with the collection of a Muslim tax called Khums, which is a pillar of Shia Islam.

The Bahrain Institute for Rights and Democracy said the move would stoke unrest.

‘We are deeply concerned that these actions will escalate tensions on the streets and may even lead to violence, as targeting the country's leading Shia cleric is considered to be a red line for many Bahrainis,’ Sayed Ahmed al-Wadaei, Director of Advocacy said in a statement.

Bahrain has stripped scores of people of their citizenship over the past two years, apparently in a campaign to end any opposition in the country.