Libya's internationally recognised government has said it will end all contracts with companies from Turkey, a country it has accused of supporting a rival administration.

The government of Prime Minister Abdullah Al-Thinni did not spell out its reasons for the decision, posted on a cabinet website late on Sunday.

A Turkish official said the government was evaluating the situation in the north African oil producer, where Turkish businesses have traditionally had a strong presence.

Al-Thinni and the allied elected parliament have been confined to a rump state in the east since an armed group called Libya Dawn seized the capital Tripoli and reinstated a previous assembly.

"The council of ministers ... decided to review all contracts with foreign companies in all areas and exclude Turkish firms from operating in Libya," the cabinet statement said.

Major world powers have boycotted the Tripoli government which critics say is backed by Islamists groups. But the United Nations has included lawmakers from the rival parliament in a dialogue aimed at defusing a violent power struggle between the two Libyan administrations.

Turkey is one of a handful of countries which has publicly received officials from the Tripoli government and parliament.

Ankara has denied siding with the Tripoli government, and says it supports UN efforts to broker peace, while repeatedly calling for more inclusive talks to end the bloodshed.

Critics of Ankara say its Libya policy is an extension of a pro-Islamist agenda which has already seen relations sour with other former regional allies, notably Egypt.

Any ban of Turkish companies would be limited to eastern areas where Al-Thinni's forces are in control. Much of western Libya is held by the rival administration and its allied factions, while Islamist militants have also exploited a power vacuum to show a presence in some areas.

Libya's official government banned Palestinians, Syrians and Sudanese from entry in January, saying their countries were undermining Libya's security. – Reuters