UPDATE 4-Egypt arrests dozens under anti-terror law, bomb hits Cairo
* Cabinet declared Brotherhood a terrorist group on Wednesday
* Bomb in Cairo wounds five, police dismantle second bomb
* U.S. believes Egypt going "way too far" in crackdown
* Sisi says Egypt will be "steadfast" confronting terrorism
* Publication of Brotherhood newspaper halted (Adds U.S. comment in paragraphs 6-8)
By Tom Perry and Shadia Nasralla
CAIRO, Dec 26 (Reuters) - Egypt increased pressure on the Muslim Brotherhood on Thursday, detaining dozens of its supporters on suspicion of belonging to a terrorist organisation the day after it was declared one by the government, security officials said.
A bomb blast in a Cairo suburb wounded five people - the second attack this week after a suicide bomber killed 16 people north of the capital on Tuesday. Army chief Abdel Fattah al-Sisi, who led the overthrow of President Mohamed Mursi in July, said Egypt would be "steadfast" in the face of terrorism.
The Cairo blast, which blew windows out of a bus, appeared to be the first aimed at civilians in a recent wave of attacks. But there was no claim of responsibility to say what had been targeted. A second device found nearby was defused.
The government declared Mursi's Muslim Brotherhood a terrorist group on Wednesday in response to the suicide attack that targeted a police station a day earlier in the city of Mansoura. It accused the group of carrying out the bombing, which the Brotherhood condemned.
The move gives the authorities wider scope to crack down on the movement that propelled Mursi to the presidency 18 months ago but has been driven underground since the army toppled him.
In Washington, a U.S. official said that the administration of President Barack Obama was not considering, or even discussing, the possibility of the U.S. government designating the Muslim Brotherhood as a terrorist organization.
The official also said the U.S. administration believed the Egyptian government was going "way too far" in its current crackdown on the Brotherhood and its supporters.
However, the official said that despite its reservations about the Egyptian government's actions, the Obama administration also was not planning to take any action against Egypt or its authorities in response to the crackdown.
The United States decided in October to withhold some of its annual $1.3 billion in military aid to Egypt, pending progress towards democracy after the overthrow of Mursi, the country's first freely elected head of state.
Sixteen of the arrests under the new law were in the Nile Delta province of Sharkiya. The state news agency said those held were accused of "promoting the ideology of the Muslim Brotherhood group, distributing its leaflets, and inciting violence against the army and police". Security sources gave a country-wide total of 38 arrests on terrorism charges.
From now on, anyone taking part in Brotherhood protests will be jailed for five years, Interior Ministry spokesman Hany Abdel Latif told state TV. Jail terms for those accused under the terror law stretch up to life imprisonment. "The sentence could be death for those who lead this organisation," he said.
Terrorism charges will also apply to anyone who finances or promotes the group "verbally and in writing". Publication of the Brotherhood's newspaper, Freedom and Justice, was halted in response to the decision.
The state has accused the Brotherhood of turning to violence since the army toppled Mursi after mass protests against his rule. Since then, attacks on the security forces have become commonplace, with about 350 soldiers and policemen killed.
The Brotherhood denies turning to violence, saying the army has mounted a bloody coup and killed hundreds of its supporters.
The government says it will stick to its political transition plan. The next step is a mid-January referendum on a new constitution, after which elections will follow.
Sisi is widely tipped to win a presidential election expected next year, assuming he runs.
INTERIOR MINISTRY SAYS TO PROTECT CHURCHES
Some analysts believe the nation of 85 million people faces a protracted period of Islamist militancy, with attacks spreading beyond the restive Sinai Peninsula, the scene of the worst violence against the security forces to date.
The government has yet to make public any evidence to back up the charge that the Brotherhood staged the Mansoura suicide attack.
Responsibility for the attack was claimed by the Sinai-based radical Islamist group Ansar Bayt al-Maqdis. Ansar Bayt al-Maqdis has taken responsibility for several other major bombings, including a failed attempt to kill the interior minister in September.
The state news agency reported that the security forces had thwarted an attempt to set off a bomb outside a police compound in Kafr el-Sheikh province.
The Interior Ministry said it will secure polling stations for next month's referendum by deploying secret police, combat units and explosives experts, according to a statement.
It said it would boost security at churches before Jan. 7, when Coptic Christians, who make up about a tenth of the population, celebrate Christmas.
The Interior Ministry has opened three telephone lines for citizens to report suspected terrorist activities, including those by the Brotherhood, an official said.
The Brotherhood's Islamist allies responded defiantly to the cabinet decision, vowing to continue protests.
"The putschists are a terrorist organisation. The Brotherhood are peaceful patriots," they said in a statement.
In the weeks after Mursi's removal, the security forces killed hundreds of his supporters while dispersing their protest camps, and arrested thousands more, including most of the Brotherhood's top leadership.
State prosecutors last week ordered Mursi and others to stand trial on charges including terrorism and conspiring against Egypt. They could face the death penalty.
The National Alliance to Support Legitimacy, the pro-Mursi coalition, called for a "week of anger" over the decision.
The public prosecutor's office, which is investigating the Mansoura bombing, said there would be no comment until its investigation was complete. (Additional reporting by Mark Hosenball in Washington; Editing by Mark Trevelyan and Ken Wills)
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