The Libyan government has said it is open to “any” political reform but Muammar Gaddafi must stay in power to avoid a new Iraq or Somalia.
A spokesman told Reuters that Colonel Gaddafi was a “unifying figure”, and insisted his forces only targeted armed rebels, not civilians.
The Libyan leader has reportedly appeared in public in Tripoli.
Meanwhile, evacuees from the besieged city of Misrata accused pro-Gaddafi forces of atrocities against civilians.
Fighting has continued in the east of the country where the rebels have been trying to regain ground lost in recent days, and coalition aircraft attacked military vehicles believed to belong to Col Gaddafi’s forces.
The oil-rich country’s vital coastal belt is effectively split between rebel forces in the east and government loyalists in Tripoli and the west, nearly two months after the revolt against Col Gaddafi’s rule erupted.
The son of Colonel Gaddafi has insisted that he and his father do not feel betrayed by the defection of the Libyan Foreign Minister Moussa Koussa who arrived in London last week.
Saif al-Islam told the BBC that Mr Koussa had travelled to Britain for health reasons because he was an old and sick man and needed treatment.
‘Elections, referenda, anything’
A Libyan government envoy, Deputy Foreign Minister Abdelati Obeidi, is currently on a tour of European capitals aimed at resolving the conflict.
Speaking in Tripoli, government spokesman Moussa Ibrahim said Col Gaddafi was “a safety valve for the country to remain together”.
“The leader provides Libyan tribes and Libyan population of a unifying figure, as a unifying figure,” he said.
“Many Libyans, many Libyans want him to lead the process forward because they are scared if he is not there for any reason we will have what happened in Iraq, we will have what happened in Somalia, we will have what happened in Afghanistan.”
Libya, the government spokesman said, was open to political reform – “elections, referenda, anything” – but “the leader has to lead this forward”.
Mr Ibrahim said it was not for the West to tell Libya “you have to lose your leader or your system or your regime”.
Denying government attacks on civilians, he challenged the outside world to investigate any alleged crimes.
“We are fighting armed militias,” he said. “You are not a civilian if you take up arms.”
Libyan state TV showed what appeared to be live footage of Col Gaddafi saluting supporters from a jeep outside his fortified compound at Bab al-Aziziya in Tripoli late on Monday.
‘Corpses in the street’
On Sunday, a Turkish humanitarian ship carrying more than 250 injured people from Misrata, the only major city in western Libya still under rebel control, arrived in the rebel capital Benghazi.
Speaking from Tunisia, other evacuees told Reuters that Gaddafi forces there had been “massacring” civilians.
“You have to visit Misrata to see the massacre by Gaddafi,” said Omar Boubaker, a 40-year-old engineer with a bullet wound to the leg, brought to the Tunisian port of Sfax by a French aid group.
“Corpses are in the street. Hospitals are overflowing.”
In the east, rebels were trying again on Monday to advance towards the oil town of Brega.
The BBC’s Wyre Davies, on the road close to Brega, said the rebels appeared to be more buoyant and organised than recently.
US jets attacked Libyan military vehicles near the cities of Sirte and Brega on Monday, US officials said.