Gaddafi's hidden billions may be used to fund the fighters of the resistance

(AP)

Billions of dollars of Colonel Gaddafi's money stashed outside of Libya are to be used to pay for the uprising against him under plans revealed by the US in Rome yesterday. Secretary of State Hillary Clinton said that Washington was trying to free part of £30bn in frozen Libyan assets in the US and give them to the leadership in the rebel-held city of Benghazi.

Libya's Transitional National Council (TNC), which says it needs as much as $3bn to survive the coming month, welcomed the financial lifeline but dismissed Turkish plans for a ceasefire in the next seven days as unrealistic. Nato allies Turkey and Italy are pushing proposals for a cessation of hostilities, but there has been no change in the position of the Alliance, the Gaddafi regime or the rebels on the ground.

"Until Gaddafi's militias return to their barracks any talk of a ceasefire is pointless," said Jalal al-Gallal the TNC spokesman in Benghazi. "Gaddafi knows that if he withdraws his forces now he may as well leave the country and he has no intention of doing that."

The Libyan leader, in power for 42 years, has offered a truce but refused to discuss standing down, a condition Nato and the rebels say is essential.

After more than two months, the battle for Libya is locked in a stalemate, with regime forces unable to stamp out pockets of resistance in the Western towns of Misrata and Zintan and both sides have dug in on Libya's eastern front. Forces loyal to Colonel Gaddafi have been hurt by Nato airstrikes by remain better-equipped and trained than their rebel counterparts. The allied bombardments have not so far done little apart from preserve the uneasy status quo.

Foreign ministers from 22 countries queued in Rome to restate their confidence in Nato, but the lack of progress has worried several members. Italy's fractious coalition has fallen out over the conflict, which has caused an upsurge in African migrants. In between relentless coverage of pro-Gaddafi rallies in Tripoli, state television in Libya has run repeated reports of waves of migrants heading north.

Turkey, which belatedly called this week for the Libyan leader to stand down, has been circulating a roadmap for a Libyan ceasefire. "What we mean is ceasing all fire, withdrawing all armies from cities, full humanitarian access," said Turkey's foreign minister, who added that this should be possible within seven days without giving details.

As an aid ship docked in Benghazi yesterday ferrying more than 1,100 evacuees from the besieged city of Misrata and reports came in of more rocket attacks on rebel enclaves in the west, a ceasefire seemed further away than ever.

The rebels are appealing to the international community to back them with weapons as well as money if they want to avoid a lengthy conflict in Libya. "We need strategic arms that can change the conflict and allow us to strike at their forces from the same distance they strike at us," said Mr al-Gallal. Qatar's Prime Minister, Hamid bin Jassim al-Hani told reporters that some countries were "already sending arms" to Benghazi. The Gulf state has emerged as the rebels' strongest backer and pledged up to $500m to the fund.

Attempts to use billions of dollars in Libyan assets, much of it owned by the Gaddafi family, have run into legal problems. US proposals for a cash injection will require changes to the law in the US so a short-term fund has been agreed to deal with the immediate needs of authorities in Benghazi to pay for food, public salaries and medicine until the end of the month. Britain has said that it will not be contributing to the fund after allocating several million to ongoing humanitarian efforts.

Earlier, three more countries were said to have formally recognised the TNC. But Spain, Netherlands and Denmark denied joining France, Qatar and Italy in recognising the council. The trio did agree that the council was a "legitimate interlocutor" for the Libyan people, a step which would allow them to receive national assets held outside Tripoli.