Washington (dpa) - As President Donald Trump's days in the White House wane, his State Department is making bold moves to alter US foreign policy before Joe Biden takes office on January 20.

The latest came on Sunday night, when Secretary of State Mike Pompeo announced he was designating Yemen's Iran-backed Houthi rebels as a "foreign terrorist organization," a move aid groups say could have dire consequences for Yemen's impoverished population.

The designation "seeks to deter further malign activity by the Iranian regime in the region," Pompeo said in a tweet. He said the move also strengthens efforts to achieve a peaceful, sovereign and unified Yemen, where a civil war has raged since 2014.

Yemen's internationally recognized government on Monday welcomed the move.

"We welcome a decision taken by the US administration on the designation of the Houthis as a foreign terrorist organization," the Foreign Ministry said in a statement.

The ministry added that the decision harmonizes with the government's demands to punish the terrorist militias.

"The Houthis deserve to be designated as a terrorist organization, not only for their terrorist operations, but also for their attempts to prolong the conflict and for causing the world's worst humanitarian catastrophe," it added.

The Houthi rebels denounced the decision.

"The United States is the source of terrorism and [US President Donald] Trump's policies are terrorist and its actions are terrorist," Mohamed al-Houthi, a senior member of the group, wrote on Twitter.

Critics say Pompeo's decision will only fuel the country's famine.

"US Secretary of State Mike Pompeo's announcement ... has a far-reaching impact on the already dire humanitarian situation in Yemen," said Mohamed Abdi, the Yemen country director for the Norwegian Refugee Council.

"The sanctions will hamstring the ability of aid agencies to respond, and without additional safeguards and broader exemptions for the commercial sector, Yemen's faltering economy will be dealt a further devastating blow.

"The US government must ensure that any sanctions do not block food, fuel and medicines from entering a country already in the middle of a full-blown humanitarian catastrophe," Abdi said.

The Houthi rebels took over Yemen's capital, Sana'a, and other areas in late 2014. A Saudi-led coalition has been fighting the rebels since March 2015.

Saudi Arabia welcomed Washington's move, hoping it would help put an end to the Houthis' "terrorist acts" and halt the supply of missiles, drones, weapons and funds to the group.

The move "will support the success of ongoing political efforts and will force the leaders of the Iranian-backed Houthi militia to return to political talks and take these seriously," the Saudi Foreign Ministry said.

The country on the Arabian Peninsula is one of the poorest in the world - and the war has significantly increased the suffering of people there. According to UN figures, 24 million people - around 80 per cent of the population - are dependent on humanitarian aid.

The State Department has made several significant diplomatic moves as Biden prepares to take over.

For example, Pompeo announced that the US would lift restrictions on dealing with Taiwanese government officials and would send an ambassador this week on a visit to Taiwan, which China considers a renegade province.

"China firmly opposes this and strongly condemns the decision made by the US side; there is only one China in the world, Taiwan is an inalienable part of the Chinese territory and the government of the People's Republic of China is the sole legitimate government representing the whole of China," Foreign Ministry spokesperson Zhao Lijian said in Beijing on Monday.

Washington recently recognized Morocco's sovereignty over Western Sahara and a government official visited the disputed territory. The Trump administration also imposed new sanctions on Iraqi militia leaders and Iranian industries.