"The  important thing is to have a contract that will organise the lives  of Libyans."

Development plan

Gaddafi, considered reform-minded in comparison to his father, said that Libya needed to strengthen its grass-roots direct democracy and set up numerous independent bodies such as a central bank, a high court and media outlets.

He also detailed a $82.8bn plan for social and economic development.

"Society needs to have independent media to highlight corruption, cheating and falsification," he said. "Libya must have an independent civic society and independent bodies."

"The important thing is to have a contract that will organise the lives of Libyans."

Saif al-Islam Gaddafi
Gaddafi said the country's current political Jamahiriya system, based on his father's Green Book which mixes Islamic ideas with some socialist principles, was flawed in principle.

That system criminalises political dissent and bans the creation of political parties and a freely elected parliament.

Colonel Muammar Gaddafi abolished the constitution drawn up in 1951, 37 years ago, which  made Libya a constitutional monarchy.

A short temporary constitution was replaced in 1977 by a four-article "Declaration on setting up the power of the people".

Gaddafi senior's "direct democracy" is carried out by select "people's committees".

Prime ministerial power

His son stressed the need to widen the political dialogue beyond those committees. Political debate has been banned in Libya outside that framework.

He also called for strengthening the power of the prime minister so that he could choose his ministers, something the people's committees have done up to now.

However, in his televised speech, Gaddafi also told the crowd of mainly young Libyans that four issues must be kept out of any political debate and future reforms - sharia (Islamic law), security and stability, Libya's territorial unity and his father's leadership.

Gaddafi holds no official government post but is considered his father's most trusted political envoy.

Another new measure he revealed was a scheme to give every new-born Libyan child a sum of money deposited in a bank to pay for education and health care.

"That amount of money will allow children to live without the help of their parents," he said.

Gaddafi also said an airport would be built in every Libyan city and the country would buy 47 new aeroplanes.