Tensions have risen between the two countries since Saudi Arabia recalled its ambassador to Tripoli in December over what it called an "atrocious" plot to kill Crown Prince Abd Allah.
"Saudi Arabia asked yesterday the Libyan ambassador to Riyadh to leave. Since Saudi Arabia is the host state, the Libyan ambassador will return to Libya," a Libyan foreign ministry source said on Thursday.
Saudi authorities have, however, refused to comment.
Libya has denied the assassination plot and Libyan leader Muammar al-Qadhafi has blamed the tensions between the two countries on "baseless US press reports".
The US investigation into the plot began as Washington and London were welcoming al-Qadhafi back into the international community after he decided to dismantle his weapons of mass destruction programme.
Al-Qadhafi blames "baseless"
US press reports for the row
In October, a US court sentenced prominent US Muslim activist Abdurahman al-Amoudi to 23 years in jail for illegal financial dealings with Libya and for his role in the alleged assassination plot.
Amoudi said in court documents that he had contacted Saudi dissidents in London on behalf of some Libyan officials to kill the crown prince.
In early 2003, the crown prince and al-Qadhafi had clashed at an Arab summit when the Libyan leader criticised the kingdom for hosting US forces before the Iraq war.
The prince walked out after angrily pointing at al-Qadhafi and questioning how he had come to power.