Khan said Muhammad Raza Khan, chief of the Election Commission of Pakistan (ECP), told MML's lawyer at the final hearing of the registration that the new party has links with terrorist groups and as such "We can't enlist you."
The ECP spokesman said the commission cited an interior ministry recommendation that the MML was "affiliated" with Lashkar-e-Taiba (LeT) that attacked Mumbai in 2008 killing over 160 people, and that such terrorist groups could breed violence and extremism in politics.
The United States has designated LeT founder Hafiz Saeed a terrorist and offers a $10 million reward for information leading to his conviction. Saeed, currently under house arrest, heads the Jamaat-ud-Dawa (JuD), which Washington says is a front for LeT.
Pakistan's reluctance to press charges against him has been a sore point in relations with Washington and India over the past decade.
Saifullah Khalid, the head of MML, said his party would challenge the decision. "An attempt is being made to keep patriotic forces away from politics," he said.
The party is likely to continue operating unofficially, as it did last month when one of its leaders contested a by-election in the eastern city of Lahore as an independent candidate.
The candidate, Yaqoob Sheikh, won several thousand votes, though officials from MML and JuD ran his campaign. Saeed's portraits adorned posters promoting Sheikh.
The move to bar the party appears at odds with what political and former military sources told Reuters was a plan by the military's Inter Services Intelligence (ISI) spy agency to integrate terrorist-linked organisations by bringing them into politics as part of a de-radicalization drive.
Pakistani army spokesman Major-General Asif Ghafoor also said last week the integration of terrorists into the country's politics would be based on seeking a constructive role for the terrorist-linked groups, although he did not comment on the military's role in any such strategy.
"It is in my knowledge that the government has started some discussion over it, that is, how do we mainstream them," Ghafoor said.
India and Afghanistan have accused Pakistan's military of backing and using terrorist groups such as LeT as proxies, a charge the army denies.
The MML is actively running a campaign for its candidate contesting another by-election on October 26, to be held in the northwestern city of Peshawar.
(Reporting by Asif Shahzad)