The Panamanian-flagged Whiskey Trio, belonging to a Turkish company called Trio Shipping, has remained at the Varberg port in Halland county since Friday.
Thomas Åström, a senior official at the Swedish Transport Agency told AFP: "We are prohibiting them from leaving port, mainly for safety reasons, but also because of the working conditions for the crew."
The alert was raised by a seafarers' union after a Whiskey Trio crew member told it that he was not given permission to see a doctor despite being ill.
The transport workers' union (transportarbetareförbundet) on its website decried "a rusty ship with poverty wages", which it said was "laden with rockets and explosives".
A picture from inside the ship. Photo: Private
When questioned by AFP, the transport authority did not reveal the nature of the ship's cargo which was scheduled to leave for the Netherlands.
The authorities did however speak of multiple breaches of safety rules, notably in the areas of fire safety and safety and rescue equipment.
Union inspector Göran Larsson, who had visited the ship, told the Aftonbladet tabloid that he was shocked at seeing the poor living conditions, including dirty and dilapitated cabins, outdated food and insufficient water points.
"When we came the crew were having breakfast. They were eating old, dry bread which they tried to toast, olives and tea. It was horrible to see," he said.
According to Larsson the ship's final destination was the Middle East.
"I get so worried, first they load the boat with rockets and explosives and then they are not allowed to leave. It's fortunate we were able to help these people because otherwise you don't know what would have happened. Perhaps they would have exploded in the middle of the sea," he said.