A group of pranksters have handed out more than 1.2 million fake New York Times newspapers, mainly in New York City and Los Angeles, with a front page story declaring "Iraq War Ends".

The elaborate 14-page edition, dated July 4, 2009, is said to be the work of a group called the Yes Men, whose previous hoaxes include masquerading as World Trade Organisation officials announcing they were disbanding the body.

"It is fake and we are looking into it," said New York Times spokeswoman Catherine Mathis.

A statement sent from a website set up for the fake edition, www.nytimes-se.com, said creating the newspaper took six months and that it was printed at six different presses and then given to thousands of volunteers to distribute.

"We've got to make sure Obama and all the other Democrats do what we elected them to do," Bertha Suttner, identified as one of the newspaper's writers, said in the statement.

"After eight, or maybe 28 years of hell, we need to start imagining heaven."

President-elect Barack Obama takes office on January 20 after eight years of the Bush administration and 28 years after the inauguration of Ronald Reagan.

The newspaper includes a front page story saying that "Ex-Secretary of State Condoleezza Rice reassured soldiers that the Bush administration had known well before the invasion that Saddam Hussein lacked weapons of mass destruction."

The Bush administration has said it believed at the time of the March 2003 invasion that Iraq had chemical and biological weapons and was trying to develop a nuclear bomb.

Other headlines declared that the "Maximum Wage Law Succeeds,""Nationalised Oil to Fund Climate Change Efforts" and "Nation Sets Its Sights On Building Sane Economy."

There is also a full page fake advertisement on page three from the world's largest publicly traded oil company Exxon Mobil saying the company applauded the end of the Iraq war and that peace is "an idea the world can profit from".

In a pamphlet handed out to volunteers when they picked up copies of the newspaper to distribute there was a "Frequently Asked Questions" section. In response to "who made this?" it said: "Who knows? Rumors are it's a group of writers from several mainstream dailies - including The New York Times."

The Yes Men, who were the subject of a book and documentary in 2004, have pulled off pranks including posing as Exxon Mobil and National Petroleum Council representatives to deliver a speech at a Canadian oil conference.

They have also posed as federal housing officials at a New Orleans event with the city's mayor and the governor of Louisiana and promised to throw open closed public housing to thousands of poor former city residents.

But they are not the first to fake The New York Times.

According to the paper's "City Room" blog, the best-known spoof was during the 1978 newspaper strike and the prank included journalist Carl Bernstein, author Christopher Cerf, humorist Tony Hendra and Paris Review editor George Plimpton.

-Reuters