Prime Minister Anders Fogh Rasmussen, who heads a liberal-conservative coaliton government, told reporters the aid was intended to buy food and sanitation products, ensure water distribution, build housing and help refugees who flee to neighbouring countries.

The money would also "contribute to the political stability and democratisation of Iraqi society," he said.

Rasmussen said the government would present its proposal to the financial committee of parliament this week.

Denmark is one of three countries that has contributed militarily to the US-led war effort, sending a corvette, a submarine and 160 crew.

Britain and Australia are the other two countries.

SPACE.WIRE