The row saw Danish flags being burnt in Muslim states

The court in Aarhus said there was not enough reason to believe the cartoons were meant to be insulting or harmful.

The cartoons sparked violent protests around the world after Jyllands-Posten published them in 2005.

An appeal against the verdict has been lodged, and the verdict was met with disappointment in Muslim countries.

"It is not up to the court to decide if Muslims will have hard feelings or not," Ameer ul-Azeem, spokesman for Jamaat-e-Islami, told the Associated Press news agency.

His group belongs to an Islamic alliance that organised mass protests across Pakistan earlier this year.

In Syria, where a mob attacked and set fire to the Danish and Norwegian embassies in February, legislator Mohammed Habash said the ruling would "widen the gap between the Western and Islamic world".

"What the newspaper did represents a true insult to millions of Muslims who do not follow Danish laws," Mr Habash, who heads the Islamic Studies Centre in Damascus, told AP.

'Not offensive'

The City Court in Aarhus said there was not enough reason to believe the cartoons were intended to be insulting or harmful to Muslims.

The organisations brought the lawsuit in March after the Danish attorney-general's decision not to make criminal charges against the newspaper under racism and blasphemy legislation.

Even if the text accompanying the pictures could be read as being derogatory and mocking, the cartoons are not offensive

Aarhus court

Since the racism and blasphemy laws cannot be used in a civil suit, the groups sued the editor-in-chief and cultural editor of the newspaper for libel, the BBC's Julian Isherwood reports from Copenhagen.

They accused the paper of publishing text and cartoons which were "offensive and insulting" to Muhammad.

The cartoons, they argued, "attacked the honour of believers because they portrayed the Prophet as war-like and criminal and made a clear link between Muhammad, war and terrorism".

But a judge ruled on Thursday that the cartoons were "not offensive... even if the text accompanying the pictures could be read as being derogatory and mocking".

"Of course it cannot be excluded that the drawings offended some Muslims," the ruling said.

"But there is no sufficient reason to assume that the cartoons are or were intended to be insulting... or put forward ideas that could hurt the standing of Muslims in society."

Muslim furore

After Jyllands-Posten published the cartoons on 30 September 2005, a campaign of protest gradually gathered steam in the Muslim world, erupting into deadly riots in February of this year.

Islamic tradition explicitly prohibits images of Muhammad and other major religious figures. At least one of the cartoons also portrayed Muhammad as a terrorist.

Death threats were made against the artists. Danish Prime Minister Anders Fogh Rasmussen appeared on Arabic TV to apologise for any offence caused.

Jyllands-Posten has defended its publication of the cartoons on grounds of freedom of press, but it also accepted they had caused offence to many Muslims and apologised.