RIYADH, Sept 17 (Reuters) - Saudi Arabia's top clerical council, the only body in the country authorised to issue fatwas or Islamic legal opinions, declared on Wednesday that "terrorism is a heinous crime" under Sharia, and perpetrators should be made an example of.

The statement, days after Saudi Arabia and other Arab states pledged in Jeddah to combat militant ideology, was the most comprehensive attack the kingdom's conservative clergy have made so far on Islamist radicalism and the Islamic State group.

In a statement carried on state media, they did not specify particular punishments, but said they should act as a deterrent. Saudi Arabia applies the death penalty, usually by public beheading, for many serious crimes.

Signed by all 21 members of the council and quoting extensively from the Koran and sayings of the Prophet Mohammad, the statement also prohibits militant financing or encouraging young people towards militant acts.

It said people who issued fatwas or other opinions that "justify terrorism" were not permissable in any way and were "the order of Satan".

Saudi Arabia has joined international efforts headed by the United States to combat the Islamic State group in Iraq and Syria, and has also worked with Washington in its battle against al Qaeda.

Sharia is the primary legal system in Saudi Arabia, where clerics of the official Wahhabi Sunni Muslim school enjoy significant power through a close alliance with the ruling Al Saud dynasty, which bases its legitimacy in part on religion.

Some liberal Saudis and foreign analysts have said that while senior Wahhabi clerics have spoken out against militant groups, they routinely use highly intolerant language towards Shi'ites and non Muslims that may contribute to radicalisation.

FATWAS

The kingdom's Grand Mufti, who heads the state-appointed Council of Senior Scholars, has already described militants of Islamic State and al Qaeda as Islam's foremost enemy in a series of public comments in recent weeks.

The mufti, Sheikh Abdulaziz Al al-Sheikh, in 2007 said "terrorists" deserved "had al-harraba", the ultimate punishment under Sharia which involves execution followed by the public display of the body as a deterrent.

The statement described terrorism as any crime aimed at corrupting and undermining security, offences against lives or property, homes, schools, hospitals, factories, bridges, state facilities or oil and gas pipelines, or blowing up or hijacking aeroplanes.

Dozens of people have been sentenced to long jail terms over the past month for security offences connected to militant attacks in the kingdom last decade, and to efforts to join conflicts in foreign countries.

In February, King Abdullah decreed prison terms for people giving support to extremist organisations or going overseas to fight, following concerns that young Saudis with militant groups in Syria, Iraq and Yemen may eventually target their homeland.

The statement also hit out at criticism of some religious teachings in schools and remarks by senior clergy, which critics of the Al Saud have said fosters hate.

(Reporting By Angus McDowall; editing by Ralph Boulton)