Libya has excluded Danish companies from an infrastructure redevelopment plan worth 150 billion dinars ($126.5 billion) in protest at cartoons of the Prophet Mohammad in Danish newspapers, the government said.

The economy and trade ministry moved to enforce a boycott of goods from Denmark, implementing a cabinet decision taken last week, the government said in a statement printed in Libyan newspapers on Tuesday.

"The boycott will exclude medicines but will extend to banning Danish companies from taking part in Libya's 150 billion dinar, five-year development programme," it said.

The government did not provide figures for the value of Libyan-Danish bilateral trade but economy experts said it was worth several million U.S. dollars and included products such as soft drinks and cheeses.

Western countries are lobbying hard for lucrative contracts to upgrade Libyan infrastructure laid low by years of economic sanctions.

The energy-rich North African country wants to modernise water and sanitation facilities and build airports, schools and houses.

The controversial cartoons depicting the Prophet were first published in 2005 but gained little attention until they were reprinted outside Denmark, sparking protests across the Muslim world in which dozens of people were killed.