No reason was given for the one-month ban which was reported to foreign media by Iraqi Government and media sources after Babel failed to appear on news stands on Wednesday.
Babel is known for carrying Western reports on Iraq's conflict with the United States and is said to be the most influential newspaper in the country.
But it appears that attacks made on pro-American Arab leaders in recent issues may have landed the paper in trouble.
The French news agency AFP said the government had warned against criticising other Arab states in the wake of a Beirut summit in March when Baghdad's relations with other states in the region began to thaw.
However, recent Babel issues featured:
In addition, this Sunday saw Babel carrying a Western report that Saddam Hussein had tried to secure a "bolt-hole" for his family in Libya in the event of his ouster by the US.
Uday Hussein also runs a television channel, Youth TV, which airs reports by other Arab channels not usually heard on Iraq's state-run media.
The BBC's Paul Reynolds says the Iraqi leader's eldest son is a flamboyant character who does not necessarily reflect his father's views.
By contrast, his younger brother Qusay is generally thought to be made more in Saddam Hussein's image and to be his political heir apparent.
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