CAIRO (Reuters) - An Egyptian military tribunal dropped charges of terrorism against 40 members of the Muslim Brotherhood on Sunday, a lawyer for the group said.

Lawyer Abdel Moniem Abdel Maqsoud told Reuters that the court had advised the defence team that they had dropped the charge and altered a separate charge of leadership of a banned organisation to membership of a banned organisation.

Abdel Maqsoud advised caution and said the defence team needed time to determine the implications of the court's move, but said that legally dropping charges of terrorism would usually also mean dropping charges of money laundering.

"A first and general reading of this decision suggests it's a move to lightening (of a possible sentence) ... but how much, and to what extent, is not obvious," Abdel Maqsoud said.

"As we said at the beginning, this is a political issue, and is not based on law," Abdel Maqsoud said.

Egypt transferred 40 members of the group, the most powerful opposition group, to military court in February. Included among them was Khairat el-Shater, the Muslim Brotherhood's third-in-command.

The men were the first Brotherhood members to appear before a military court since 2001. Six of the men are out of the country and are being tried in absentia.

The Brotherhood holds about a fifth of the seats in parliament through members elected as independents, but the government calls it an outlawed organisation and regularly subjects its members to harassment and detention.