The government of Muammar Gaddafi has denounced Britain's decision to recognise the Libyan opposition as the sole legitimate authority in the country.
The UK's decision is "irresponsible, illegal and in violation of British and international laws", Khaled Kaim, Libya's deputy foreign minister, said in Tripoli, the Libyan capital, on Wednesday night.
He said Gaddafi's government "will take necessary actions" and pursue a legal challenge to the recognition in both British and international courts.
The recognition of the National Transitional Council (NTC) was announced by William Hague, the UK foreign minister, on Wednesday and came 12 days after the US made a similar move.
Hillary Clinton, the US secretary of state, announced recognition for the NTC at a meeting in Turkey of the international "contact group" on Libya on July 15.
Gaddafi's diplomats expelled
Recognition in the UK means the NTC can send its own diplomatic personnel, who will be treated like the representatives of any other government, and can receive millions of dollars in frozen oil funds.
Mahmud al-Naku, a Libyan exile in Britain, has been tapped as the NTC's ambassador, an opposition official announced on Wednesday.
Britain is to transfer about $147m in frozen assets to the NTC and has already said it will extend a roughly $143m loan based on frozen Libyan funds.
Britain has officially recognised Libya's main opposition group as the country's legitimate government, and asked all diplomats belonging to Muammar Gaddafi's government to leave the United Kingdom.
"In line with this decision, we summoned the Libyan charge d'affaires here to the foreign office this morning and informed him that he and other regime diplomats from the Gaddafi regime must now leave the United Kingdom," William Hague, the UK foreign secretary, said on Wednesday.
"We no longer recognise them as the representatives of the Libyan government and we are inviting the Libyan National Transitional Council to appoint a new Libyan diplomatic envoy to take over the Libyan embassy in London."
The current charge d'affaires and all eight remaining staff and their dependents have three days to leave the country, the UK foreign office said.
In an audio message to loyalists on Wednesday, Gaddafi said that he and his people were "ready to sacrifice" in order to defeat NATO and the Libyan fighters.
'Political, economic boost'
Al Jazeera's Anita McNaught, reporting from the opposition stronghold of Benghazi, said that the release of frozen funds would be welcomed by NTC leaders, as they had been running dangerously low on cash.
She said that if the funds were handed over to the oil company that Hague named in his statement, they could go towards repairing an oil pipeline to one of the east's largest oilfields, in Soriya.
Hoda Abdel-Hamid reports on the return of families who were expelled from Misrata by Gaddafi forces
Mustafa Abdul Jalil, the head of the NTC, said in Benghazi on Wednesday that the UK's decision "gives us a political and economic boost".
"This means Gaddafi and his followers are no longer legitimate,'' he said.
But not all countries involved in the Libyan conflict have fallen in line.
Russia has criticised such moves as a "policy of isolation" that takes sides in a civil war and goes beyond the UN mandate of protecting civilians.
Britain is one of the leading participants in the NATO campaign, but the government has been under pressure over its failure to remove Gaddafi from power.
Despite the forceful diplomatic manoeuvering, Hague has said for the first time this week that Gaddafi might be able to remain in Libya, as long as he is not in power.
'Question for Libyans'
Hague said that "Gaddafi is going to have to abandon power, all military and civil responsibility", but "what happens to Gaddafi is ultimately a question for the Libyans".
France and the US have made similar statements.
But Jalil said on Wednesday that the deadline for a proposal involving Gaddafi ceding power and remaining in Libya had expired.
"We made a proposal. The deadline has past. The proposal has expired," Jalil said of the three-point offer during a press conference in Benghazi. Under the proposal, Gaddafi would have relinquished all powers and would remain under "close supervision" in a location of the "Libyan people's" choosing, he said.
The proposal marked a major shift from previous opposition demands that Gaddafi leave and be tried for war crimes in The Hague.