Environmentalists on Wednesday welcomed a decision by Icelandic authorities to ban a local beer containing whale meal.

The controversial beer was the result of a joint business between a Stedji, a small local brewery, and whaling company Hvalur (whale in Icelandic), and contained whale meal, a byproduct of reducing whale meat and bones to oil.

"Obviously we are pleased," Whale and Dolphin Conservation spokesman Danny Groves said.

"Initially the whaling company didn't have a permit to sell this product."

The whale beer was banned last Monday by local health inspectors, who ruled it did not fulfill food production regulations.

"Hvalur does not have permission to produce meal for food production, so we had to put a stop to this," public health inspector Helgi Helgason told public broadcaster Ruv.

Environmentalist see the beer as an attempt to open new markets for whale products.

"The lack of demand in Iceland and also in Japan means that the whalers are resorting to finding new markets for their meat," Groves said.

"Beer is just another example of this approach."

The beer was to be sold at a mid-winter festival in the island nation, where brewer Dagbjartur Ariliusson said he wanted to serve "something ethnic" to drink.

"If I was to describe the beer, it is dark, with a rich taste and you can feel the whale taste in the undertone and the aftertaste," Ariliusson said.

"We don't use much whale meal in the manufacturing and the whale meal existed already."

Stedji used around one kilo (2.2 pounds) in 2,000 litres (528 gallons) of beer.

Brewer Ariliusson was disappointed, saying the whale beer had passed all tests.

"But if this is the final decision, then we will of course have to obey," he said.