Libyan ruler Colonel Muammar Gaddafi's forces are cornered and his defeat is "only a matter of time", Deputy Prime Minister Nick Clegg said today.
After chairing a meeting of the National Security Council, Mr Clegg insisted the reappearance in Tripoli of the dictator's son Saif Al-Islam was "not the sign of some great comeback for the Gaddafi regime".
But he acknowledged there would be "frustrations and setbacks" before the regime fell.
Mr Clegg said: "Our assessment is that Free Libya forces now control much, but not all, of Tripoli.
"Yes, there will be frustrations and setbacks but the remaining remnants of the Gaddafi regime are now cornered. It's only a matter of time before they are finally defeated and Libya is completely free."
Mr Clegg played down the significance of Gaddafi's son Saif turning up at Tripoli's Hotel Rixos, where a number of foreign journalists are staying.
"He is not roaming freely through Tripoli. He and the remaining pro-Gaddafi forces are now cornered, they are making their last stand, and it's only a matter of time before they are finally defeated. About that we are very confident indeed."
Colonel Gaddafi's whereabouts is still unknown, while Saif's elder brother Mohammed is also missing after reportedly breaking free from house arrest last night.
Mr Clegg's comments came as television images showed a jubilant and free Saif, regarded as his father's immediate successor, meeting supporters outside the loyalist-held Hotel Rixos before claiming that forces loyal to his father had "broken the backbone" of the rebel offensive.
He also indicated that Gaddafi remained in the violence-torn capital, stating that the weakening regime remained in control.
International Development Secretary Andrew Mitchell blamed confusion over Saif's apparent arrest on the "fog of warfare" but acknowledged there would be a "bumpy ride" over the coming days.
"There was a lot of confusion, there are quite long lines of communication involved," he told the BBC Radio 4's Today programme.
"It's inevitable in this situation, with the warfare going on as it is, that there will be some confusion."
On BBC1's Breakfast he added: "This will be a bumpy ride, as the Prime Minister made clear in his statement yesterday.
"But if you look at the events over the past week or so it is clear that the Free Libya forces are doing well and now occupy very large parts of Libya."
Prime Minister David Cameron, who resumed his family holiday in Cornwall today, and US President Barack Obama discussed the rapidly unfolding situation during a telephone conversation last night in which they called on Gaddafi to "relinquish power once and for all" and discussed plans for a "peaceful transition to democracy".
Forces loyal to Gaddafi continue to fight fierce battles with rebels surging into Tripoli from all sides and taking control of large areas of the city.
There were significant casualties after clashes around the dictator's heavily fortified compound.
The head of the Libyan National Transitional Council (NTC), Mustafa Abdel Jalil, warned that victory was not yet complete.
But he added: "The youth of Libya have written an epic heroic battle."
Nato spokesman Colonel Roland Lavoie told Today the alliance was not in "direct contact" with the rebels and had no plans to send in ground troops.
But he said the no-fly zone authorised by United Nations Security Resolution 1973 would continue to be enforced by Nato jets.
"We have enough to be busy with the current situation," said Col Lavoie. "This mission is not finished yet."