Confrontation between Sunnis and Shi'ites has stirred international tension in the oil-exporting region, gripped by its worst unrest in years.
"An external plot has been fomented for 20 to 30 years until the ground was ripe for subversive designs... I here announce the failure of the plot," King Hamad bin Isa Al Khalifa was quoted as telling troops in a report by state news agency BNA.
Had the plot succeeded, he said, it could have spilled into neighbouring states.
The king thanked troops brought in from fellow Sunni-ruled neighbours to help quell weeks of unrest following protests by mainly Shi'ite Bahrainis calling for political reform.
He did not say who was behind the plot. The comments came after a day of tit-for-tat diplomatic expulsions between Bahrain and Shi'ite power Iran.
Gulf Cooperation Council (GCC) Secretary-General Abdulrahman al-Attiyah told reporters: "We reject any intervention in our internal affairs and among these countries (intervening) is Iran," after he was asked about troops from Saudi Arabia and the United Arab Emirates being sent to help the Bahrain government.
Saudi-owned Al Arabiya television channel quoted Bahrain authorities as saying intelligence communications systems had been sent from Iran to the Bahraini opposition.
The ferocity of last week's government crackdown, in which Bahrain called in Gulf troops, imposed martial law and drove protesters off the streets, has stunned majority Shi'ites, the main force behind the protests, and enraged Tehran.
Iran, which supports Shi'ite groups in Iraq and Lebanon, has complained to the United Nations and asked neighbours to join it in urging Saudi Arabia to withdraw forces from Bahrain.
Bahrain expelled Iran's charge d'affairs on Sunday, accusing him of contacts with opposition groups, a diplomatic source said.
The Iranian ambassador was asked to leave last week. Iran expelled a Bahraini diplomat in response.
More than 60 percent of Bahrainis are Shi'ites. Most protesters have campaigned for a constitutional monarchy, but calls by hardliners for the overthrow of the monarchy have alarmed Sunnis.
Shi'ites across the region have complained for decades of oppression by Sunnis, dominant throughout the Arab world.
Bahrain's political crisis has been the subject of a media war between pro-Iranian television channels and Bahraini state television. Each side accuses the other of incitement.
An uneasy calm spread through the city as Bahrainis returned to work and there were fewer checkpoints in the streets, though helicopters still buzzed over Shi'ite areas.
Shaking their fists and shouting "Down with Al Khalifa", about 2,000 people joined the fourth funeral procession in as many days for someone whose death during the unrest is blamed by Shi'ites on the authorities.
Waving black and Bahraini flags, mourners gathered in the Shi'ite village of Buri to bury 38-year-old father-of-three Abdulrusul Hajair, found on Sunday apparently beaten to death.
"We want to know the reson for this ugly crime and who is behind it," said Youssef al-Buri, his cousin.
"Are people now getting killed for their identity? What is this country coming to now? Abductions? Beatings? Murder?"
Bahraini police cars and military armoured vehicles surrounded the entrance to the village of Buri, but did not interfere with the funeral.
Bahrain's largest Shi'ite opposition group Wefaq, said police told Hajair's family on Sunday to collect his body from hospital.
Speaking at a 15-minute protest in front of the United Nations building in Manama on Sunday, a former Wefaq parliament member said almost 100 people had gone missing in the crackdown