The Libyan government said Tuesday it was ready to negotiate reforms, but refused any talk of Moamer Kadhafi stepping down saying he was a unifying figure after ruling the nation for four decades.
"What kind of political system is implemented in the country? This is negotiable, we can talk about it," government spokesman Mussa Ibrahim told journalists. "We can have anything, elections, referendums."
But Kadhafi\'s future was non-negotiable, he stressed, only hours after opposition rebels flatly rejected a reported peace deal that could see the embattled leader\'s son take charge of the north African nation.
Kadhafi was "the safety valve" for the unity of the country\'s tribes and people, Ibrahim said. "We think he is very important to lead any transition to a democratic and transparent model."
The comments came as a Kadhafi envoy held talks in Turkey and Malta amid US media reports that two of the leader\'s sons were offering to oversee a transition to democracy that would include his removal from power.
But Italy, Libya\'s former colonial master, dismissed the diplomatic ouvertures as not credible, as fierce fighting continued and rebel fighters launched a new attempt to recapture the oil refinery town of Brega.
The rebels, battling for the past seven weeks to oust Kadhafi, advanced to the outskirts of Brega only to be forced back by fierce artillery fire.
Italy said Kadhafi and his family must leave power and the international community had to stand united against regime diplomacy.
"Kadhafi and his family must go," Foreign Minister Franco Frattini told Italian news channel SkyTG24.
He also dismissed proposals by Libya\'s Deputy Foreign Minister Abdelati Laabidi, which have not been made public, as "not credible", adding: "It is not possible to accept them."
In a show of defiance, Kadhafi greeted supporters late Monday in his first public appearance since March 22 at his Bab el-Aziziya residence in Tripoli, bombed by coalition forces two days earlier, national television said.
His son Saif al-Islam, long seen as the successor to his father before the wave of protests in the north African country, also briefly showed up at a Tripoli hotel where journalists are staying giving an interview to the BBC.
Saif had not been seen in public since coalition air strikes on March 19.
Laabidi, who met with Greek Prime Minister George Papandreou on Sunday, held talks with Turkish Foreign Minister Ahmet Davutoglu Monday on a possible ceasefire.
Kadhafi\'s regime was "looking for a solution," Athens said, as Laabidi then travelled to Malta for discussions on the seven-weeks conflict.
But the rebels swiftly rejected any deal involving the Kadhafi family.
"Kadhafi and his sons have to leave before any diplomatic negotiations can take place," Transitional National Council spokesman Shamseddin Abdulmelah told AFP, adding the regime had lost any right to talk of a negotiated exit after it continued to pound Misrata, 214 kilometres (132 miles) east of Tripoli.
Ahead of a meeting next week in the Qatari capital Doha of the international contact group on Libya, Italy announced it was joining France and Qatar in recognising the TNC, and said it would send ships and planes to evacuate the wounded from Misrata.
Rebels there again pleaded for support from the international coalition to counter Kadhafi\'s forces who have bombarded the city for more than a month.
"Kadhafi\'s forces will not stop bombing the city. The planes of NATO, whose mission is to protect civilians, do not even fly over the region," said a rebel spokesman.
But the US military on Monday withdrew its fighter jets from the international air campaign, after keeping them in the air for another 48 hours at NATO\'s request.
US combat sorties ended at 2200 GMT, with American warplanes on standby as NATO takes the lead, Pentagon spokesman Captain Darryn James said.
After that, "US aviation assets are expected to cease strike sorties and will remain on an alert status if NATO requests their support," James said.
For more than 40 days the insurgents have defended Misrata, Libya\'s third largest city, as it is besieged and pounded by Kadhafi\'s troops.
Kadhafi\'s forces have been targeted by air strikes since March 19 under a UN mandate to use "all necessary measures" to protect civilians, but the siege has still not been broken.
A Turkish aid ship which arrived in Benghazi on Sunday carrying more than 250 patients from Misrata left early on Monday for the Turkish port of Cesme.
Those on board, many torn apart by shrapnel and bullets, told of a city under lockdown that has gone for weeks without electricity or running water.
Meanwhile, the US government Monday lifted sanctions against Libya\'s former foreign minister Mussa Kussa after he defected to Britain, a move designed to further weaken Kadhafi\'s inner circle.
Kussa\'s assets were frozen last month as part of a US and allied campaign to pile pressure on the Libyan leader and his closest advisers.
"Kussa has since severed ties with the Kadhafi regime, and today the United States is lifting sanctions against him," the Treasury Department said.
"Kussa\'s defection and the subsequent lifting of sanctions against him should encourage others within the Libyan government to make similar decisions to abandon the Kadhafi regime," said David Cohen, the department\'s top sanctions official.
Britain said it was not pursuing "an exit strategy for Kadhafi," but a "genuine ceasefire."
"There have been lots of reports of envoys and of the regime reaching out in a number of ways... We have been very clear throughout about what the next step should be and that needs to be a genuine ceasefire and an end to violence," a spokesman for Prime Minister David Cameron said.
Meanwhile, the battle for the town of Brega is fast reaching stalemate.
Kadhafi\'s men will not risk advancing farther into rebel-held territory through the open desert, where they are easy targets for NATO air strikes. And the insurgents do not have the necessary weaponry to counter the artillery the loyalists have deployed inside the town.
Rebels said Kadhafi\'s troops also attacked an oilfield in the remote south that the insurgents hope to use to fund their revolt.
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