Libya's Prime Minister Abdul Hamid Dbeibah said late on Sunday that he had suspended Foreign Minister Najla Mangoush and referred her to an investigation.
The move came hours after Israel said Mangoush had held a meeting with her Israeli counterpart Eli Cohen last week in Rome.
Libya has no diplomatic relations with Israel, like several other Arab countries. Under a 1957 Libyan law, dealing with Israel can be punishable by up to nine years in prison.
What was the reaction in Libya?
The Israeli announcement prompted small protests in Libya around the capital Tripoli.
Prime Minister Abdul Hamid Dbeibah's Government of National Unity announced in a Facebook statement the decision to "temporarily suspend" Mangoush, handing over the foreign ministry portfolio to the youth minister.
Meanwhile, the foreign ministry said in a statement on its Facebook page that Mangoush had rejected formal meetings with Israeli representatives, in line with the stance of the Government of National Unity.
The Libyan foreign ministry described it as a "chance and unofficial encounter. What happened in Rome was an unofficial meeting that was not pre-planned," the ministry said. It also said that the meeting, which took place during talks with the Italian foreign minister, did not involve any agreements.
However, Reuters news agency on Monday cited an Israeli official as saying that Foreign Minster Cohen's meeting with Mangoush had been agreed in advance "at the highest levels" in Libya.
What had Israel said about the meeting?
Israel's statement announcing the meeting on Sunday suggested the two parties had discussed possible cooperation, including Israeli aid in humanitarian issues, agriculture and water management.
Israeli Foreign Minister Eli Cohen also said he stressed to his Libyan counterpart Najla al-Mangoush the importance of preserving Jewish heritage in her country. The talks were facilitated by the Italian foreign minister.
In recent years, Israel has normalized its diplomatic ties with several Arab countries including the United Arab Emirates, Bahrain, Morocco and Sudan.
