The move follows angry demonstrations against public burnings in Denmark and other countries.
The Danish government is set to propose a law which would make it illegal to desecrate any holy book in Denmark.
This comes after a string of public desecrations of the Quran by a handful of anti-Islam activists sparked angry demonstrations in Muslim countries.
Denmark has been viewed as a country that facilitates insult and denigration of the cultures, religions, and traditions of other countries, the government said.
The proposal by the government is to extend Denmark's existing ban on burning foreign flags by also "prohibiting improper treatment of objects of significant religious significance to a religious community,” Justice Minister Peter Hummelgaard said.
“The bill will make it punishable, for example, to burn the Quran or the Bible in public. It will only aim at actions in a public place or with the intention of spreading in a wider circle,” Hummelgaard said, adding that it would be punishable by fines or up to two years in prison.
Hummelgaard told a news conference that the recent protests were “senseless taunts that have no other purpose than to create discord and hatred.”
Denmark’s government has repeatedly distanced itself from the desecrations, but has insisted that freedom of expression is one of the most important values in Danish society. It said that would not be affected by the proposed law.
Foreign Minister Lars Løkke Rasmussen said “it was an important political signal that the Denmark wants to send out to the world.”
Last month, he said the government would seek to legally prevent burnings of the Quran or other religious scriptures, saying it “only serves the purpose of creating division in a world that actually needs unity.”
He added that there must “be room for religious criticism” and that there were no plans to reintroducing a blasphemy clause that was repealed in 2017.
It was not clear when the proposal would be presented to the 179-seat Folketing. The three parties in the governing coalition control 88 seats and are also supported by the four lawmakers representing the semi-independent Danish territories of Greenland and the Faeroe Islands.