While Gaddafi addressed loyalists in Tripoli, people in rebel-held Benghazi threw shoes at his televised image

Muammar Gaddafi has denounced backers of plans for a no-fly zone over his country and urged Libyans to take up arms and prepare to confront a possible invasion by Western powers.

Addressing selected supporters late on Tuesday, Gaddafi called the rebels "rats" and denounced Western nations. "They want Libyan oil," he said.

"France now raises its head and says that it will strike Libya," Gaddafi told the gathering at his Bab al-Azizia fortified compound in central Tripoli on Tuesday.

"Strike Libya?" he asked. "We'll be the one who strikes you! We struck you in Algeria, in Vietnam. You want to strike us? Come and give it a try."

The speech was carried as world powers wrangled over a draft resolution on imposing a no-fly zone over Libya to prevent Gaddafi's advancing forces from using their air superiority to take the rebel capital, Benghazi, in the east.

In the short, emotional speech, Gaddafi attacked Britain for calling for a no-fly zone. "What right do you have? Do we share borders? Are you our tutor?" he said.

Libyans would fight to the death to defend their country, he said.

He criticised the Arab League, which has backed a no-fly zone, saying it was "finished", and the Gulf Co-operation Council, which he said had lost its legitimacy.

"The Arab League is finished. There is no such thing as the Arab League," Gaddafi said.

"The Gulf Co-operation Council is finished. It's actually the 'Gulf Unco-operative Council' ... The Arab  people however] remain."

During his appearance, a crowd watching on a TV projection on a wall in Benghazi shouted curses and threw shoes at the image.

As before, Gaddafi played down the scope of the conflict in his country. "They said thousands have died, but only 150 have died," he said.

Libyan state television aired calls for the opposition to stop fighting, apparently hoping to sway populations in the east away from support of the rebels.

"Those who are asking you to put down your arms want peace for you, so please help them and stop shedding blood," the broadcaster said.

"Libya is for everyone and by everyone. So let God's word be the highest and the word of evil be the lowest."