Singapore: Singapore on Friday banned foreign companies from funding an annual gay pride rally as part of new rules governing protests, leading rights campaigners to label the move "outrageous interference".

Starting next month, only citizens, organisations and companies from Singapore will be allowed to sponsor or participate in activities at Speakers’ Corner -- the city's sole designated protest area -- according to the ministry of home affairs.

"Non-Singapore entities will need a permit if they want to engage in such activities relating to a Speakers’ Corner event," the ministry said in a statement.

Singapore has long taken a hard line on what it considers foreign interference in domestic politics and has often been criticised by human rights groups for clamping down on political freedoms.

Human Rights Watch urged foreign companies with regional headquarters in Singapore to reconsider the city state's suitability as a business location.

"The Singapore government is not going to be satisfied until civil society in Singapore lives on the ground gagged and bound. 

"This is an outrageous interference in the right to freedom of association and a clear continuation of Singapore's anti-LGBT bias," the group's deputy director for Asia, Phil Robertson, said.

The move followed a government warning in June after multinationals led by Facebook, Google and Goldman Sachs sponsored a gay pride rally called Pink Dot as part of their corporate equal-opportunity initiatives.

The rally, which started in 2009, has attracted crowds of up to 28,000 despite a backlash from conservative groups in the multi-racial nation of 5.6 million, where protests are strictly controlled.

In a statement, Pink Dot's organisers said they were "disappointed" but "respect and understand" the government's position.

"In light of the new rules, we call on more Singaporeans and local companies, who share in our desire and vision for a more diverse and inclusive Singapore, to step forward to support us in Pink Dot 2017," the statement added.

Open support for gay rights has grown in the wealthy city-state in recent years, aided by changing social norms among the younger generation and a large influx of tourists and expatriates.

However Singapore's top court in 2014 upheld a law dating back to British colonial rule that criminalises sex between men.

Last year Prime Minister Lee Hsien Loong said the country was not ready to legalise same-sex marriage, but insisted that the gay community was not discriminated against.

A government source told AFP the announcement was an "affirmation of a long-standing policy" preventing foreigners from participating in demonstrations at Speakers' Corner.

Speakers' Corner opened in 2000 and is loosely modelled on the free-speech area of London's Hyde Park. 

Only Singapore citizens and permanent residents are allowed to take part in protests in the area without police permits. Speeches must also avoid inciting religious or racial hatred.