LONDON, Sep 22 (Reuters) The High Court today backed government moves to control benefits payments to the families of suspected terrorists, the Treasury said.

In July, the Treasury suspended benefits payments to several families of suspected terrorists, with a view to appointing a third party to regulate future handouts.

The government said it took the action because it feared benefits might be used to fund terrorist activity.

The decision was challenged but rejected by judicial review and the government now intends to pursue the policy, which has already been applied to five families.

''We have repeatedly said that this is the correct approach to take and so I am glad the Court has confirmed this,'' said Economic Secretary to the Treasury, Ed Balls.

''We will continue to take reasonable and proportionate measures that are necessary to meet our international obligations to prevent funds being diverted to terrorism,'' he added in a statement.

Many people saw the move by the government to tighten state payments as a reaction to the public backlash after newspapers reported that a number of high-profile extremists, such as Abu Hamza al-Masri, had received state handouts.

Hamza was jailed in February for seven years for inciting the murder of non-Muslims.

Friday's decision by the High Court is open to appeal.

REUTERS DKA HT1752