The White House Friday requested Google to remove the video of the movie, "Innocence of Muslims," that triggered violent protests against the U.S. missions worldwide.
The U.S. had asked the search engine giant to reassess the video link on the basis of YouTube's terms of service against "hate speech."
Google said that the controversial clip would remain online as it was "well within the guidelines" of YouTube.
The company Friday blocked the access to the video in India, Indonesia and in some Middle East countries because the local laws make it illegal in these countries. Earlier, Google voluntarily had blocked the video URL in Egypt and Libya, considering the delicate and inflammable situation in these counties.
"We've restricted access to it in countries where it is illegal such as India and Indonesia, as well as in Libya and Egypt, given the very sensitive situations in these two countries," the company said, according to a Reuters report. "This approach is entirely consistent with principles we first laid out in 2007," it added.
However, the video will be available for the internet users in the rest of the world.
The video uploaded on YouTube July 2 depicts Prophet Muhammad as a fraud and philanderer. The movie incited worldwide protests against the U.S. as it was reportedly made by a Coptic Christian living in Southern California.
The U.S. embassies in Libya, Egypt and Yemen were stormed by violent mobs protesting against the movie. On Tuesday, the U.S. ambassador to Libya and three other Americans were killed in the protest attack on the embassy in Benghazi.
The protest against the movie had spread to several other countries by Friday and the U.S. diplomatic missions aboard beefed up security.