The Government has expelled five diplomats from the Libyan embassy in London because they "could pose a threat" to national security.
Updating the Commons on yesterday's London conference on Libya, Foreign Secretary William Hague told MPs: "To underline our grave concern at the (Gaddafi) regime's behaviour, I can announce to the House that we have today taken steps to expel five diplomats at the Libyan embassy in London, including the military attache.
"The Government also judged that were these individuals to remain in Britain, they could pose a threat to our security."
Earlier at Prime Minister's questions, David Cameron said the UK would not rule out arming Libyan rebels to protect civilians.
He said the UN Security Council resolution would not block the supply of weapons "in certain circumstances" despite an arms embargo on Libya.
Tornados had destroyed artillery and an armoured vehicle near Gaddafi's home town Sirte during the latest wave of bombings, he said.
Mr Cameron told MPs: "It is an extremely fluid situation but there is no doubt in anyone's mind the ceasefire is still being breached and it is absolutely right for us to keep up our pressure under UN Security Council 1973.
"I can confirm to the House the coalition took action yesterday against regime forces harassing civilian vessels trying to get into Misrata and yesterday and overnight the RAF flew 24 sorties. Tornado aircraft destroyed artillery and an armoured fighting vehicle near Sirte."
Responding to a question from Labour leader Ed Miliband on arming rebels, he said: "I've said before in this House that we must do everything to comply with both the Security Council resolutions.
"And as I've told the House the legal position is clear that the arms embargo applies to the whole territory of Libya.
"But at the same time UNSCR 1973 allows all necessary measures to protect civilians and civilian-populated areas.
"Our view is that this would not necessarily rule out the provision of assistance to those protecting civilians in certain circumstances.
"We do not rule it out but we have not taken the decision to do so."
Mr Hague said there were currently 16 nations contributing assets to coalition operations, including nations from the Middle East.
Fifteen nations have now contributed 350 aircraft, he said, and vessels from 10 nations are supporting the arms embargo. Yesterday Sweden announced it would contribute eight fighter aircraft.
He told MPs: "UK forces have undertaken over 160 aerial missions over Libya since operations began, in addition to missile strikes.
"We are continuing to target military hardware that Gaddafi is using to kill his own people."
Mr Hague said he had yesterday received a letter from the local council in Misratah thanking Britain and its allies for the targeted strikes and the enforcement of a no-fly zone.
"The letter stated that the local council can testify to the effectiveness and the accuracy of those strikes and confirmed that there has not been a single case of civilian injury, let alone death, in and around Misratah as a result of coalition activity," he said.
"This is testament to the skill, experience and precision of our armed forces and the whole House will join me in paying tribute to them."
Earlier this week senior British diplomat Christopher Prentice visited Benghazi for talks with rebel leaders and other political figures, including the president of the Interim Transitional National Council, Mustafa Al-Jalil, Mr Hague said.
The meetings came as 30 foreign ministers and representatives from the Arab League, EU and Nato met United Nations Secretary General Ban Ki Moon in London to discuss the situation in Libya.
Mr Hague said the Government's aims of getting more countries to support the UN resolutions, deal with the humanitarian crisis and plan for Libya after the conflict, were all met.
The ITNC had also announced a post-conflict political programme, while a Libya Contact Group, which will provide "leadership and overall political direction" in the country was established, the Foreign Secretary said.
He added: "The London conference showed that we are united in our aims, seeking a Libya that does not pose a threat to its own citizens or to the region and in working with the people of Libya as they choose their own way forward to a peaceful and stable future.
"It demonstrated that clear international support for the people of Libya. With that support there is every prospect of focused and sustained assistance to the people of Libya as they seek to determine their own future."
Shadow foreign secretary Douglas Alexander said he welcomed the progress made at the London conference but asked Mr Hague to clarify the Government's position when it came to arming rebel forces.
There was evidence al Qaida has potentially attached itself to some rebel groups, he said, and this should make the Government very cautious about arming them.
Labour also wanted to know whether Gaddafi would be allowed to flee Libya and escape prosecution if it meant there was not further bloodshed, Mr Alexander added.
The shadow foreign secretary questioned how much support military action had among Arab League countries as Saudi Arabia did not send a representative to yesterday's conference, which was not attended by a member of the African Union.
He also asked whether rebel troops in eastern Libya had been involved in fighting against British forces in Afghanistan and Iraq.
Mr Alexander asked the Foreign Secretary in the Commons: "Of course we would all prefer Libya without Gaddafi but given our lack of knowledge about some elements of the rebel forces, would you agree we must proceed with very real caution on the question of armaments?"
In reply, Mr Hague said that while the current arms embargo prevented weapons being provided to the whole of Libya, Resolution 1973 allowed "for all necessary measures to protect civilians" to be taken.
He said the view of the British Government, which was not necessarily shared internationally, was that this meant rebels protecting civilians could be armed although ministers had "not yet taken a decision".
"Of course, if we change our policy on this, we would certainly want to inform the House of Commons about it but we are not currently engaged in the arming of opposition or rebel forces," he added.
Mr Hague said the Government would want to know if the rebels had links with al Qaida but he believed the ITNC was "sincere in their commitment to an open, pluralistic Libya".
There was still very wide support for military action among the Arab League, but he admitted the African Union did not have a "united position" on the conflict.
He added the Government could not control what happened to Colonel Gaddafi but it did not propose to give him "any exemption" from the prosecutor of the International Criminal Court.
There needed to be a "genuine ceasefire" to fulfil the UN resolution, he added.
Conservative former foreign secretary Sir Malcolm Rifkind (Kensington) said he welcomed the announcement by the British and US Governments that arming rebel forces would be "permissible" if it meant protecting civilians.
He said the "physical safety" of Libyans would only be ensured if there is a "speedy end to this civil war and departure of Gaddafi", adding: "This cannot be achieved by air coalition power alone, but only if the insurgents... are properly assisted to enable this war to be brought to an end as soon as possible..."
Mr Hague replied that "questions of advisability and policy would have to examined" before the rebels were armed.
He added: "One can make the argument that you make.
"One can also make the argument that introducing new weapons into a conflict can have unforeseeable and unknown consequences, both in the immediate future and in the longer term.
"Such considerations would have to be very carefully weighed before the Government changed its policy on this matter."
Tory Richard Ottaway, chair of the Foreign Affairs Select Committee, asked: "On the question of the arms embargo, would you agree that there's a very big difference between arming the rebels to protect themselves and arming the rebels to attack Gaddafi, which is tantamount to regime change?"
Mr Hague replied: "Certainly, there would be a big difference between those positions, you are quite right."
He said the resolution did not rule out the "provision of assistance to those protecting civilians in certain circumstances" but this was "not about the general arming of one side in this conflict".
Labour former defence secretary Bob Ainsworth asked whether the Government had gauged the level of support from allies over the potential arming of rebels.
Mr Hague said it was for other countries to state their position.
But he added: "All of the nations involved in the conference were of the same mind - however they read the resolutions - that it's not their policy at this moment to engage in arming particular groups within Libya. So I believe there is an international consensus on that at the moment."
John Baron (Basildon and Billericay), the only Conservative MP to vote against the resolution, asked whether Gaddafi's ground forces were a target.
"Some of us remain of the view that Western intervention is as much about regime change as it is about humanitarian aid," he said.
"So can you be absolutely clear - is it the Government's view that the UN Resolution 1973 would allow a no-fly zone to, in effect, follow the rebels should they wish to attack Tripoli and also allow the West's fighter planes to actually hit Gaddafi's ground forces in Tripoli if that was to be the case?"
Mr Hague said it was not a Western intervention but the "enforcement of a UN resolution which African and Arab nations voted for".
He said: "The no-fly zone applies to the whole of Libya, is is enforced over a very wide area of Libya. Of course, that includes Tripoli and would continue to include Tripoli, whatever the circumstances on the ground.
"The use of airstrikes against ground forces of the regime has been and will continue to be ... on forces that are attacking, or can be used to threaten to attack, civilians or populated areas."
Labour veteran Dennis Skinner (Bolsover) warned that giving arms to groups in Libya could backfire on Britain.
"Why can't the Government be quite clear about not re-arming the resurgent groups in Libya, now that the Nato commander has testified to the US Senate he cannot rule out infiltration by al Qaida or other terrorist groups?" he asked.
"As a historian, you know that in the 1980s another ally, America, decided to arm Osama bin Laden to get the Soviets out of Afghanistan.
"And now British troops are dying on the mountains of Afghanistan because of that error. Don't repeat it."
Mr Hague replied: "You mustn't get too excited about things that we haven't done.
"These questions of advisability are the very questions that would need to be answered. As I told the House, if we change our policy on this we would say so and we would be able to debate it then.
"You are quite right that in history there are examples of weapons being given to people in good faith and then those weapons being used for other purposes that their original owner had not desired at a later stage.
"That's one of the considerations that has to be borne in mind."
Senior Tory Edward Leigh (Gainsborough) urged "extreme caution" on arming Libyan groups.
"Would it not be a double win for al Qaida and would we not start to lose support in the Arab world if we were seen to impose a solution on Libya, and the same time to give arms to what could prove to be Islamist insurgents in the future?"
Mr Hague said the coalition would not "impose" any solution in Libya.
Labour veteran David Winnick (Walsall N) said there had been "more critical voices today" on British action in Libya.
"And the reason why, in my view, there are critical voices is that despite what the Foreign Secretary has been telling us, more and more the impression is being gained that, in fact, the coalition forces are involved in regime change," he said.
"It's totally outside the resolution and indeed outside international law."
Mr Hague said no action had been taken that was outside the UN resolution.
Tory Rory Stewart (Penrith and the Border), a former army officer and diplomat, said Britain should be "very, very careful not to push the letter of the law but stick to the spirit of that resolution".
He added: "If anyone is to arm the rebels, can I respectfully suggest Britain should not be in the lead?"