French satirical newspaper Charlie Hebdo drew ire with the cover of its latest issue, re-enflaming a debate that pits free speech against religious sensitivities that has embroiled Europe since 12 people were killed during an attack on its Paris office one week ago.

The new issue that went on sale on Wednesday features a cover cartoon of Prophet Muhammad weeping and holding a "Je Suis Charlie" (I am Charlie) sign under the headline "All is forgiven". It was the first issue to be published after the attack.

While surviving staff described their choice of cover as a show of forgiveness, most Muslims consider any depiction of the Prophet to be blasphemous, New York Times (NYT) reported. Moreover, interpretations quickly swirled around the Internet that the cartoon also contained disguised crudity, said the newspaper.

One of Egypt's highest Islamic authorities has warned that the cartoon would exacerbate tensions. The state-sponsored Dar al-Ifta said the cover was "an unjustified provocation against the feelings of 1.5 billion Muslims".

It said the cover image "will give an opportunity for extremists from both sides to exchange violent acts that only the innocent will pay for."

Death threats are also circulating online against the surviving staff of Charlie Hebdo, NYT said.

The new cover has drawn ire from Muslim groups, who warned that it could inflame tensions among those who believe the depiction of the Prophet is blasphemous, AFP reported.

Al-Azhar, Sunni Islam's most prestigious centre of learning, warned that new cartoons would only serve to "stir up hatred". The drawings "do not serve the peaceful coexistence between peoples and hinders the integration of Muslims into European and Western societies", the Cairo-based body's Islamic research centre said in a statement.

Muslim organisations in France also issued a joint statement on Tuesday expressing concern about the "numerous anti-Muslim acts observed these days", and calling on authorities to guarantee the security of mosques.

The statement also commented on the new Charlie Hebdo cover, urging French Muslims to "remain calm and avoid emotive or incongruous reactions incompatible with dignity", while "respecting freedom of opinion".

Renald Luzier, who drew the latest cover and who is one of the most prominent cartoonists at the newspaper, escaped the massacre last week because he was late for work, NYT reported.

At a news conference on Tuesday, he sought to explain the drawing. "I had the idea to draw Muhammad because he is my character. Because he exists when I draw him, because he is a character that caused our premises to be firebombed, and later to be treated as irresponsible provocateurs - while we are above all cartoonists who love to draw little guys, like when we were children."

"The terrorists have been children, too," Luzier was quoted as saying. "They drew like all the children do, and then they lost their sense of humour."

Underlining the ongoing threat, France's biggest satirical weekly, Le Canard Enchaine, said it received a death threat the day after the Charlie Hebdo attack on Jan 7.

France's Prime Minister Manuel Valls, in a speech that drew several standing ovations, called for the country to pull together, arguing that "France is at war against terrorism, jihadism, radicalism... (not) Islam and Muslims".

"I don't want Jews in this country to be scared, or Muslims to be ashamed" of their faith, he added, calling for France's intelligence capabilities and anti-terrorism laws to be strengthened and "clear failings" addressed.

The outpouring of shock and grief that has united France and saw some four million people marching across the country on Sunday continued on Tuesday as several victims were buried.

At the main police headquarters in Paris, a grim-faced President Francois Hollande laid the country's highest decoration, the Legion d'Honneur, on the coffins of the three fallen police officers draped in the Tricolore.

Two were killed during the attack on Charlie Hebdo by Said and Cherif Kouachi on Jan 7 and the third, a policewoman, was killed by another gunman, Amedy Coulibaly, a day later at the scene of a car accident. Many believe Coulibaly was on his way to attack a Jewish school nearby.

"They died so that we could live in freedom," Hollande said.

Questions have risen over how the gunmen, who were known to French intelligence, had slipped through the cracks.

While the Kouachi brothers have been linked to the Yemen-based Al-Qaeda in the Arabian Peninsula (AQAP), Coulibaly claimed to have sworn allegiance to the Islamic State in Iraq and Syria (ISIS).

European Union counter-terrorism chief Gilles de Kerchove told AFP that jails had become "massive incubators" of radicalisation and there was no way to fully shield against such attacks.

Coulibaly, a repeat offender, met Cherif Kouachi in prison where they both fell under the spell of a renowned militant. Coulibaly and Cherif reportedly coordinated last week's attacks in Paris.

Police launched a massive hunt for the three men after the attacks which culminated in two hostage crises that gripped France and the rest of the world. Coulibaly stormed into a kosher supermarket in eastern Paris and seized shoppers, while the Kouachi brothers took one person hostage in a printing firm north-east of Paris.

After a tense stand-off, the brothers charged out of the building and were shot dead on Friday. Moments later, security forces stormed the supermarket and killed Coulibaly. French authorities said four people were killed in the supermarket siege before police stormed the premises.