In a statement, Reuters' editor-in-chief Stephen Adler said the organization regretted the decision.
"We stand by Frederik Richter's reporting and we will continue to provide comprehensive and unbiased coverage from the country," Adler said.
A source close to the situation told CNBC that Richter was told of the decision at a "brief and friendly" meeting with officials from the Ministry of Information.
“They said they were upset with the article about the Crown Prince last week,” the source said.
The piece described how, in addition to Bahrain's business-friendly reputation, the Crown Prince Salman bin Hamad Al Khalifa could be another casualty of the protests, as he was “seen as more reform-minded than others in the ruling family.”
It added that it “puts at stake efforts to liberalize Bahrain's economy and attract global businesses.”
Series of Attacks
It appears not to have been the first time that government officials formally express their disapproval of Reuters’ coverage in the country.
Reuters said it was not closing down operations in Manama and would accredit somebody else.
Bahrain has been hit by unrest as its majority Shiite population called for political reform and more equal rights. The ruling royal family, from the Sunni minority, has crushed the protests and received support of forces of the Gulf Cooperation Council (GCC).
Mohamed Abdel Dayem, of the Committee to Protect Journalists (CPJ), told Reuters in a telephone interview about a series of attacks on journalists.
He said they "all amount to the same thing, which is clearing international journalists out of the country, or restricting their activities to the point where they can't cover the news." CNBC’s source said the recent move "is part of a wider crackdown on journalists. You can even see it with the local press”.
The number of detained journalists remains unclear. Dyam pointed out to Reuters that Karim Fakhrawi, the founder of the opposition daily al-Wasat, and blogger Zakariya Rashid Hassan al-Ashiri have died in what he called suspicious circumstances.
“They continue to prevent international journalists from entering the country”, the source told CNBC.
Paris-based Reporters Without Borders (RSF) said on its Web site: "the problems for those who defend media freedom continue to be extremely worrying in Bahrain." Meanwhile, observers remain skeptical about the announcement by Bahrain's King Hamad bin Isa Al Khalifa that he has ordered the state of emergency to be lifted from June 1.
It would just be two days before the deadline set by Formula One organizers for a possible decision on rescheduling the season-opening race that was ultimately called off as a result of the turmoil.