Lebanon's cabinet has told the army to draw up a plan to establish a state monopoly on arms in a challenge to the Iran-backed Shi'ite Muslim group Hezbollah, which rejects calls to disarm.

Lebanon made a game-changing decision by tasking the Army with preparing a plan to enforce a state monopoly on weapons, poses a new challenge to Hezbollah.

Hezbollah, the Lebanese Shia militant and political movement, says it will disregard a decision by Lebanon's government to task the army with establishing a state monopoly on arms. "We will treat this decision as if it does not exist," Hezbollah said in a statement on Wednesday, describing it as a "grave sin".