Tayyip Erdogan has said Turkey was working on a "roadmap" to end the war in Libya which would include a ceasefire and the withdrawal of Muammar Gaddafi's forces from some cities.
Turkey has held talks this week with envoys from Gaddafi's government and representatives of the opposition.
"We are working on the details of this road map," Prime Minister Erdogan told a news conference on Thursday.
He said a "real ceasefire should be settled immediately" and Gaddafi's forces should withdraw from besieged cities.
"A comprehensible democratic transformation process that takes into account the legitimate interests of Libyan people should start immediately," said Erdogan, calling for political reforms.
"The aim of this process should be to settle constitutional order that people freely elect their rulers."
It was not immediately clear if the two Libyan sides were discussing the terms of such a roadmap.
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Al Jazeera's Anita McNaught reporting from Tripoli said Turkey is the latest in a line of countries that have come up with proposals to resolve the Libyan conflict.
Turkey feels it has a better chance because it has been in direct talks with both Gaddafi's side as well as the Transitional National Council in Benghazi.
It has been sending aid shipments into Benghazi, a hospital ship to Misurata and has evacuated more than 475 injured Libyans for treatment in Turkish hospitals.
It also has a fleet of naval vessels with air support in the Mediterranean in enforcing part of the arms embargo.
"But the major problem is how Turkey will get both sides to accept a ceasefire when all sides still feel there is something to play for, that the cost of giving up the fight would be far too great to bear.
"Both sides are fearful that if they give up fighting now they will lose everything. This is what Turkey will have to find a way through."
Responding to Turkey's effort, Colonel Ahmad Bani, a rebel spokesman, said the rebels rejected talks with Gaddafi and demanded he quit power.
"We respect the ... Turkish people's position but Erdogan's position does not express the opinion of the Turkish people," he told Al Arabiya television.
"I think [Erdogan] is not speaking in the interests of the Libyan or Turkish people but only in his personal interest."
Earlier, a top US general said the conflict in Libya appears to be reaching a stalemate.
General Carter Ham also said the US should not arm rebels based in eastern Libya without knowing more about them.
The head of the US military's Africa Command said the stalemate is more likely now than before the US passed on control of the Libya mission to NATO.
Ham, who led the coalition air campaign before handing over command to NATO on March 31, made the remarks at a senate hearing in Washington on Thursday.
His comments are expected to further stoke debate in the US about the next steps in Libya.
On Thursday a NATO air strike killed at least five rebels near the Libyan port of Brega, the second friendly fire incident in less than a week.
Wounded rebels in a hospital in Ajdabiya said they were hit by a NATO attack on their trucks and tanks outside the contested port of Brega.
NATO promised to investigate the alleged attack by its aircraft on a tank column in the area on Thursday.
An alliance air strike not far from the same spot killed 13 people on Saturday.
NATO is facing stinging criticism from rebels who blamed the alliance for failing in a UN-mandated mission to protect civilians in Misurata last week.
Barack Obama, the US president, has ruled out sending in ground forces to Libya and top administration officials have stressed the limits of US involvement in what could become a protracted civil war.
"The prospect of a stalemate means Gaddafi remains in power ... meaning we will have a very, very serious situation in the future"
John McCain, Republican US senator
Senator John McCain, a Republican pushing for greater US involvement, had asked Ham about the risks of Gaddafi staying in power in the event of a stalemate.
"So right now we are facing the prospect of a stalemate, which then means Gaddafi remains in power," McCain said.
"Which then means that we will have a very, very serious situation with Mr Gaddafi in the future if he remains in power, particularly given his past record."
The head of the Libyan rebel movement condemned NATO this week for its slow chain of command in ordering air strikes to protect civilians.
Ham also warned the US against arming the Libyan rebels, saying: "Not without a better understanding of who the opposition force is".
"My recommendation would be that we should know more about who they are before we make any determination to arm them," he said, reflecting concerns about the risk of extremist elements within the rebels' ranks.