Libya's rebel administration publicly accepted for the first time yesterday that peace talks could start without Colonel Muammar Gaddafi being forced into exile.
The insistence of the opposition, and its Western sponsors, that the Libyan leader and his family must leave the country before negotiations can take place has been one of the main obstructions to a ceasefire.
But the head of the Transitional National Council (TNC), Mustafa Abdel Jalil, said yesterday that Colonel Gaddafi could stay in Libya, under "international supervision", while talks got under way.
Speaking in Benghazi, Mr Jalil disclosed that an offer to this effect had been made to the Libyan regime via the United Nations almost a month ago, without, so far, any response.
"As a peaceful solution, we offered that he can resign and order his soldiers to withdraw from their barracks and positions, and then he can decide either to stay in Libya or abroad," Mr Jalil said. "If he desires to stay in Libya, we will determine the place and it will be under international supervision."
A senior official in Tripoli told The Independent that although the proposal was "interesting" it was too vague in detail to be acted on immediately. In particular, the source said, Colonel Gaddafi would not countenance being under any form of house arrest. "He will not be a prisoner of foreigners in his own country," he stressed.
But there is said to be general recognition within the regime that Colonel Gaddafi needs to leave through a face-saving mechanism. Officials privately expressed their exasperation at his threat over the weekend to carry out attacks in Europe and the US in retaliation for Western air strikes.
The move by the TNC is seen as an indication that with no military victory in sight after three months of Nato bombing, there is a growing push for a diplomatic solution. According to senior French and British military commanders, President Nicolas Sarkozy has demanded a "successful ending" to the war in time for an announcement on Bastille Day, 14 July.
In what was seen as another sign of a desire for talks, the Benghazi leadership yesterday made a point of welcoming the latest African Union effort to broker a deal, with the South African President, Jacob Zuma, meeting Colonel Gaddafi. The rebels have, in the past, been dismissive of AU involvement, charging that many member states were clients of the Libyan regime. The AU has asked its member states not to execute an arrest warrant for Colonel Gaddafi issued by the International Criminal Court (ICC).
Delegates to an AU conference in Malabo, the capital of Equitorial Guinea, to discuss the Libyan crisis, said in a statement that the warrant "seriously complicates the efforts aimed at finding a negotiated political settlement to the crisis in Libya, which will also address, in a mutually reinforcing way, issues related to impunity and reconciliation".
Colonel Gaddafi, his son Saif al-Islam Gaddafi and his intelligence chief, Abdullah al-Sanussi, have been accused of crimes against humanity by the ICC, although there is little evidence for some of the allegations, such as mass rape by the regime's forces. A Libyan government spokesman, Moussa Ibrahim, declared: "The ICC is a European Guantanamo Bay. It's only against the African leaders."
Russia, which is backing the latest AU initiative, has said meanwhile that Libya will be the focus of talks today between the Nato secretary-general, Anders Fogh Rasmussen, and President Dmitry Medvedev at Sochi, a Black Sea resort.