Britain First is in trouble with the Government after the far-right, pseudo-militia group ignored demands that it remove an image of the crown from its merchandise.
The Cabinet Office, which is responsible for authorising the use of official royal symbols, has said it is now considering "next steps" after receiving a number of complaints about Britain First's use of the crown on its merchandise.
The group has an online shop featuring hoodies, wooly hats and jackets embossed with the party logo.
In a statement sent to the Huffington Post UK, a Cabinet Office spokesman said Britain First had not been authorised to use the symbol.
The Cabinet Office said it has now issued a letter requesting that the group removes all images of the Royal Crown from its website and withdraw all marketing material, publications, stationery and stock.
The Huffington Post UK asked Britain First to comment on their predicament and were told to "jog on."
A Cabinet Office spokesman told HuffPost UK that Britain First "has not fully complied with our requirements and we are considering the most appropriate next steps."
The move follows the Advertising Standards Authority (ASA) investigating the group for breaching the advertising code.
The ASA ruled that all images of the royal crown must be removed from the group's websites - but Britain First ignored the watchdog's enquiries and has no power to rule on the group's use of the symbol elsewhere.
"We understood from the Cabinet Office that the Lord Chamberlain's Office, responsible for authorising official use of the Royal Crown and Scottish Arms, had not granted permission for Britain First to use the Royal emblems on their merchandising," the ASA said in its ruling.
"The design on the clothing was clearly visible on the website pages and in the ad on Facebook and, because we had seen no evidence to show that Britain First was entitled to use the emblems, we considered that the images of the Royal Crown and Scottish Arms had been used without prior permission and therefore breach the Code."
An ASA spokesperson told HuffPost UK: "We expect all advertisers to ensure their advertising sticks to the rules for the benefit of the consumers, business and society.
"Our ruling puts on the public record the reasons why this advertiser broke the rules, if they are unwilling or unable to cooperate we will consider other sanctions to bring them into line.”
Party leader Paul Golding, a former BNP councillor, told the Guardian the ASA is a "toothless quango with no power which no one takes any notice of".
He told the newspaper the group would continue to use its logo, including the crown.
Britain First is the most active far-right group to emerge from the collapse of the BNP and EDL over the past year.
The founder of the group stood down last month, saying the group's provocative mosque invasions are "a bit rude" and attracting "racists and extremists" to the party.
Jim Dowson founded the Christian pseudo-militia after leaving the BNP, but has distanced himself from their habit of storming into mosques to provoke and goad imams, saying these were "counter-productive".
Dowson is stepping down from the party and politics, saying he could not convince Britain First leader Paul Golding to stop the invasions.
“Most of the Muslims in this country are fine," Dowson said.
"They are worried about extremists the same as us. So going into their mosques and stirring them up and provoking them is political madness and a bit rude.”
"I have come to the conclusion that no matter how hard I tried, you cannot escape from the fact that the group is being overrun with racists and extremists," he said.
Earlier this year the Electoral Commission was forced to make an embarrassing apology after allowing the extremist party to use a slogan featuring murdered soldier Lee Rigby.
The commission admitted the gross error was made even worse by the fact polling day falls on the first anniversary of Drummer Rigby's murder.
The watchdog had given the green light for Britain First to use the description "Remember Lee Rigby" on voting slips for the European Elections.