The administrative court in Manama also ordered the funds of the group, accused by authorities of "harbouring terrorism" among other charges, to be seized by the government, the source said.
The ruling can still be appealed.
Al-Wefaq was the largest group in parliament before its lawmakers resigned in protest at the crushing of protests in 2011 calling for an elected government.
The court accused Al-Wefaq, which draws most of its support from Bahrain's Shiite majority, of "inciting violence and encouraging demonstrations and sit-ins which could lead to sectarian strife in the country".
On June 28, Al-Wefaq's defence lawyers withdrew from court proceedings in protest at the government's push to accelerate the process, which had initially been set for October 6.
The court had already suspended all of Al-Wefaq's activities on June 14, ordering its offices closed and assets frozen.
In October 2014, the administrative court banned Al-Wefaq for three months for violating the law on associations.
Political parties are banned in Bahrain, as in other Gulf Arab monarchies, so Al-Wefaq has the status of an association.
That is an allusion to Iran which Bahrain, home to the US Fifth Fleet, accuses of fomenting unrest among its Shiite majority.
Al-Wefaq, also known as the Islamic National Accord Association, is heir to the Bahrain Freedom Movement which played a key role in Shiite-led anti-government protests in the 1990s that sought the restoration of the elected parliament scrapped in 1975.
Today's ruling comes despite appeals by the United Nations, United States and rights groups for the legal action against the bloc to be dropped.
UN Secretary General Ban Ki-moon had also expressed concern about the move against Al-Wefaq.
In recent months, Manama has intensified its crackdown on leading Shiite figures.
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