An Iraqi man carried out the protest outside Stockholm's main mosque after Swedish police granted a permit for the protest, which coincided with the start of the Muslim holiday Eid al-Adha.

"We will eventually teach the arrogant Westerners that insulting Muslims is not freedom of thought," Erdogan said in televised remarks.

"We will show our reaction in the strongest possible terms, until a determined victory against terrorist organisations and Islamophobia is achieved."

Erdogan's tough talk came one week before the top diplomats of Turkey and Sweden are due to meet in Brussels to discuss Stockholm's NATO membership bid.

Turkey and fellow NATO member Hungary are holding up ratification of the application, which has been approved by all the other members of the US-led defence alliance.

Western officials had hoped to formally welcome Sweden into the bloc by the time a NATO summit is held in Lithuania on July 11-12.

In its written decision granting a permit for the protest, Stockholm police said the security risks associated with the burning "were not of a nature that could justify, under current laws, a decision to reject the request".

Erdogan, who extended his two-decade rule until 2028 in a tough election last month, said Swedish officials bore full responsiblity for the incident.

"Those who commit this crime as well as those who allow it under the guise of freedom of opinion, those who tolerate this despicable act will not be able to achieve their ambitions," he said.