By Ahmed Aboulenein

CAIRO (Reuters) - An Egyptian court on Saturday approved a freeze on the assets of five prominent human rights activists and three non-governmental organizations, the latest twist in a five-year-old case in which the NGOs are accused of receiving foreign funds to sow chaos.

An investigating magistrate ordered the asset freezes in February, but they were subject to court approval. Saturday's decision paves the way for criminal proceedings against the defendants that could lead to life sentences if they are found guilty.

Egyptian rights activists say they are facing the worst assault in their history amid a wider campaign to erase freedoms won in a 2011 uprising that ended Hosni Mubarak's 30-year rule.

"We know from the start the case is political and the aim is revenge against NGOs that expose the state's abuses," said Gamal Eid, founder and director of the Arab Network for Human Rights Information whose assets were frozen.

Egypt has launched a renewed crackdown on human rights groups, questioning staff and ordering asset freezes on accusations they took foreign funding to destabilize the country. Some say they are working from home in anticipation of arrests.

"Today is a good sign that criminal indictments are probably imminent," said Hossam Bahgat, a prominent investigative journalist who is the founder and former director of the Egyptian Initiative for Personal Rights, and whose assets were also frozen.

Bahgat, Eid, and nine others are also banned from travel in connection to the case.

The court also approved asset freezes for three organizations and their directors; the Cairo Institute for Human Rights Studies and its director Bahey el-din Hassan, the Hisham Mubarak Law Center and its director Mostafa al-Hassan, and the Egyptian Right to Education Center and its director Abdelhafiz Tayel.

CHILLING SIGNAL

NGOs have felt exposed since late 2011, when authorities raided 17 pro-democracy and rights groups, accusing them of joining a foreign conspiracy against Egypt.

In 2013, a court ordered the closure of several foreign pro-democracy groups, including U.S.-based Freedom House, and gave jail sentences to 43 NGO staff including 15 Americans who had fled the country.

A case against dozens of Egyptian NGOs and lawyers was never closed but remained largely dormant until this year.

None of the NGO staff summoned for questioning have been formally charged. Egyptian law allows prosecutors to freeze assets, ban travel and remand suspects in custody for extended periods without charge.

The crackdown comes at a sensitive time for Egypt, which has been battling an Islamic State insurgency in northern Sinai and a weak economy. U.S. Secretary of State John Kerry expressed concern in March over Egypt's decision to reopen its probe into the NGOs.

Independent United Nations experts said in April that Egypt is closing down domestic NGOs and putting travel bans on their staff in order to obstruct scrutiny of human rights issues.

(Editing by Jeremy Gaunt)