The National Transitional Council has replaced Gaddafi at the Arab League as Libya's recognised government [EPA]

The Arab League has readmitted Libya to the regional bloc, turning over the country's seat to the National Transitional Council (NTC) and effectively recognising the rebel body as the legitimate authority in Libya.

Mahmoud Jibril, the deputy chief of the NTC, represented the Libyan delegation at the meeting on Saturday in Cairo.

He urged Arab nations to help rebuild and stabilise his country and asked the league to assist in unfreezing  Libyan assets abroad.

In a statement issued early on Sunday, the league called on "the UN and countries concerned" to "unfreeze the assets and property" of Libya.

Arab foreign ministers called "on the Security Council and the countries concerned to assume their responsibilities in these difficult circumstances that the Libyan people are undergoing by rescinding the decision to block the funds, assets and property of the Libyan state," the statement said.

They also asked the UN "to permit the National Transitional Council to occupy the seat of Libya in the United Nations and its various organisations."

The 22-member organisation suspended Libya's membership in February in a protest against Muammar Gaddafi's crackdown on demonstrators.

On Thursday, the UN Sanctions Committee on Libya unfroze $1.5 billion for humanitarian aid, but that amount is just a fraction of what has been frozen since the country's conflict began six months ago.

Outside the Arab League building in Cairo, a man replaced Gaddafi's green flag with the rebels' flag beside the other members' flags.