c.1600, from lug, probably a Celtic word (the first recorded use is in a Cornwall context) unrelated to lug (n.) or lug (v.) + worm. But OED suggests connection with lug (v.) on the notion of "heavy, clumsy."
(genus Arenicola), any of several marine worms (class Polychaeta, phylum Annelida) that burrow deep into the sandy sea bottom or intertidal areas and are often quite large. Fishermen use them as bait. Adult lugworms of the coast of Europe (e.g., A. marina) attain lengths of about 23 cm (9 inches). The lugworm of the coasts of North America (A. cristata) ranges in length from 7.5 to 30 cm.