Members of Libya's UN-backed Government of National Accord arrived in Tripoli on Wednesday, defying threats by rival factions that it was not welcome in the capital.
Reports of sporadic gunfire and road blocks leading into Tripoli later emerged, with questions raised whether violence would erupt, or a peaceful transition of power would ensue.
The Presidential Council was formed under a UN-mediated peace deal late last year in an effort to end the political chaos and conflict that has beset the country since the uprising that toppled Muammar Gaddafi five years ago.
It is supposed to replace the two rival administrations - one based in Tripoli, the other in the eastern city of Tobruk - that have been battling each other for more than a year.
Libyan political analyst Mohamed Eljarh said the current crisis was unprecedented.
"For now we have three governments, all operating out of Libya. What happens next depends on whether both of the other governments will hand over power peacefully," Eljarh told Al Jazeera.
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Tripoli's self-declared government and armed groups that back it had in recent days warned the unity government not to travel to Tripoli .
But seven members of the council, including its head and Prime Minister-designate Fayez al-Sarraj, arrived in the Libyan capital by sea and set up a temporary seat of power at a naval base.
The officials were prevented from flying into Tripoli by the rival government.
"At this blessed historic moment, we announce to our people the start of National Accord Government work from Tripoli and the beginning of a new era of dialogue and communication with the sons of our people, regardless of their political attitudes," Sarraj told a news conference after his arrival.
Yet, in his first remarks after Sarraj's arrival, the head of the acting government reiterated his opposition to the Government of National Accord and urged its members to either surrender or leave.
"The government of national salvation calls on those illegitimate infiltrators to either hand themselves over and be in safe hands, or to go back to where they came from," Khalifa al-Ghawi, leader of the General National Congress, told reporters.
"The salvation government is working with judicial and legislative entities, all state institutions and NGOS, as well as community leaders to take the necessary steps to save the country from the threat of chaos and foreign intervention."
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Al Jazeera's Mahmoud Abdelwahed, reporting from Tripoli, said the big question now was whether the members of the council would be able to govern.
"There are a lot of challenges facing this government here in Tripoli," Abdelwahed said. "Three major political entities in Libya are opposing the presence of this government."
Martin Kobler, the UN envoy for Libya, welcomed the arrival of the council in Tripoli and urged all public bodies to facilitate a peaceful and orderly handover of power.
"I call on the Libyan people to extend to the Presidency Council and the Government of National Accord their full support and cooperation," Kobler said.
"The international community stands firmly behind them and is ready to provide the required support and assistance," he added.
The US also welcomed the arrival of the UN-backed government, while France said it would provide its "total support" to Sarraj.
"The Government of National Accord can now begin the crucial work of addressing the full range of Libya's political, security, economic, and humanitarian challenges," US Secretary of State John Kerry said in a statement.
Ahead of its arrival, the council said it had negotiated a security plan with police and military forces in Tripoli - and with some armed groups.
Even with international support, Sarraj faces a daunting array of challenges and could struggle to impose his will on the Central Bank, the state-run oil company, and other institutions.
He is also at risk of being attacked or besieged in his base by rival militias. He is being guarded by battle-hardened militias from the city of Misrata, which saw fierce fighting during the uprising five years ago.
But Tripoli is also home to several powerful armed groups, which could move against Sarraj, setting off yet another round of fighting.
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Source: Al Jazeera and agencies