Muammar Gaddafi has reportedly appointed the head of Libya's foreign intelligence service to speak to the leadership of the anti-government protesters in the east of the country, while a minister said the government will attempt dialogue before using military force.
The appointment of Bouzaid Dordah on Monday comes as the opposition expanded its grip across the country, including several cities near the capital, Tripoli.
Asked if Libya could use military force to retake these cities, deputy foreign minister Khaled Kaim said: "We will wait until all other attempts are exhausted.
"If all attempts and efforts for dialogue ... are exhausted, a very well guided force will be used in accordance with international rules."
Representatives of the opposition, based in Libya's second biggest city, Benghazi, have formed a "national council" to keep the uprisings in different cities under an umbrella organisation.
A spokesman for the council said on Sunday that he saw no room for negotiation with the regime.
"We will help liberate other Libyan cities, in particular Tripoli through our national army, our armed forces, of which part have announced their support for the people," Hafiz Ghoga, spokesman for the new National Libyan Council, said.
A prominent figure in the opposition movement is former justice minister Mustafa Mohamed Abdel Jalil, who resigned a week ago in protest against the killing of protesters.
Gaddafi remained defiant on Monday, refusing to acknowledge the protests which have spread across the country, with hundreds holding a brief rally in Tripoli.
In an interview with ABC television, he said all Libyans loved him.
"During my conversation with Gaddafi, he told me, 'All my people love me. They would die to protect me,'" Christiane Amanpour, who conducted the interview, said in a Twitter message.
Amanpour said she asked him several times about reports of air bombing against protesters. "But Gaddafi said they did not happen and that they had only bombed military and ammunition depots," she wrote on the ABC website.
Meanwhile, video footage has emerged on the internet, showing Gaddafi's son Saif al-Islam exhorting people to fight for his father and pledging to give them weapons.