The British government is preparing to allow Colonel Gaddafi to "go into retirement in Libya" as part of a reassessment of its hardline policy towards the dictator.
David Cameron has told Foreign Office and Ministry of Defence officials working on Libyan strategy that, following months of stalemate, the time has come to find a way out of the conflict and back a French proposal to allow Gaddafi to stay in the country as part of a negotiated settlement with rebel forces.
Mr Cameron's change in stance is borne of concerns that without a decisive breakthrough by the rebels in Benghazi, which is considered unlikely, allied action in Libya could drag on for months.
The problem is compounded by the timing of Ramadan in which Muslims cannot eat or drink during daylight hours. This year Ramadan begins around the start of August, lasts for 30 days and is expected to bring a lull in the fighting on both sides.
Mr Cameron wants Britain's role in Libya to be over by the time of the Conservative Party Conference in October and the new Parliamentary session.
"At the moment we are embroiled in two foreign conflicts: Afghanistan which we can do nothing about and Libya which we can," said a Government official. "If that means altering our insistence that Colonel Gaddafi has to leave Libya then so be it."
Speaking yesterday after talks with the French Foreign Minister, Alain Juppé, William Hague, the Foreign Secretary, repeated Britain's demand for "Colonel Gaddafi to go". But tellingly he did not suggest that he had to leave the country: "We are absolutely clear that at the end of the day, Gaddafi is going to have to abandon power, all military and civil responsibility, and then it will be for the Libyan people themselves to decide what (his) fate will be either inside Libya or outside Libya."
Privately, Foreign Office officials confirm that the British position has changed – but still insist Gaddafi must have no role in the future governance of the country. "If he is out of power completely and we can be convinced that he is not going to be able to return in any form then it is something we would consider," said a source.
The new British policy marks a significant shift in the public position. In March Mr Cameron was even suggesting that Britain would not be prepared to let Col Gaddafi go into exile and that he would have to face the International Criminal Court in the Hague. But yesterday, in a growing sign of growing international consensus that a settlement with Gaddafi is the only way to secure an early end to the conflict, the UN envoy to Libya, Abdul Elah al-Khatib, arrived in Benghazi to discuss with rebel leaders plans for a negotiated end to the war.
A European diplomat said last week that Mr Khatib would try to persuade the warring parties to accept a ceasefire followed by the creation of an interim power-sharing government, but with no role for Gaddafi.
Attack on academy
* British aircraft have bombed an intelligence building being used by the forces of Muammar Gaddafi, the Ministry of Defence said yesterday.
The attack on the Central Organisation for Electronic Research (COER) building in Tripoli came on Sunday morning and involved Tornado and Typhoon aircraft.
COER is described by the Libyan authorities as an engineering academy, but the MoD insisted it was a "wholly legitimate" target as it had long been used as a cover for the Gaddafi regime.
Until Libya gave up its weapons of mass destruction programme in 2003, COER was used in the development of long-range missiles, and surveillance indicated it was still being used by Gaddafi's security apparatus, said the MoD.