UN negotiators have handed Libya's warring factions a draft proposal for forming a unity government in an attempt to end years of chaos.
"Today, the eyes of the people of Libya are on you," UN special envoy Bernardino Leon told the parties at the outset of talks on Monday in the Moroccan seaside resort town of Skhirat, saying they had the power to "bring an end to the suffering of the Libyan people".
"Recent terrorist and other attacks from groups in the country should serve as a wake up call... The fighting must end," the Spanish diplomat urged.
Since the beginning of the year, the UN has facilitated a series of different negotiating tracks seeking to bring together Libya's rival governments and militias.
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Western officials say the talks are the only hope of halting fighting that has battered the country since the 2011 uprising that ended Muammar Gaddafi's one-man rule.
An internationally recognised government has been operating out of eastern Libya since an armed alliance known as Libya Dawn took over the capital Tripoli and set up a government last summer.
Libya's turmoil is an increasing concern for European leaders as groups claiming allegiance to the Islamic State of Iraq and the Levant (ISIL) group gain ground there and smugglers take advantage of the chaos to ship thousands of migrants across the Mediterranean Sea to Europe.
Delegates from both factions were expected to head to Germany for a meeting of European and North African leaders before returning to consult with their political bases and travelling back to Morocco for more talks.
"What I can say is at the end of this week, we will have a very clear idea on who is for peace and who is not, and that will help us to focus our efforts in the future," US ambassador to Libya Deborah Jones said.
Meanwhile at a G7 summit in Germany, world leaders said in a statement: "The timing for fighting has passed, the moment for bold political decisions has come... Libyan leaders must now grasp the opportunity to conclude these negotiations and form a Government of National Accord accountable to the Libyan people."
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The UN proposal calls for a one-year-long government of national accord, where a council of ministers headed by a prime minister, and two deputies, will have executive authority based in Tripoli.
The House of Representatives, the 2014 elected parliament now in the east, will be the only legislative body, the deal states. The accord also calls for a 120-member State Council consultative body, consisting of members of the Tripoli parliament.
The agreement also addresses terms of a ceasefire, disarmament for armed groups, dealing with a unified armed forces and withdrawing armed groups from oil facilities, airports and other installations after signing of the deal.
Three previous rounds of peace negotiations between Libya's rival parliaments and governments have failed to reach an accord.