Muammar Gaddafi is ready to discuss a transition of power to be negotiated by his son, al-Saadi, sources have told Al Jazeera as rebels continued to push towards the toppled Libyan leader's hometown of Sirte.
Moussa Ibrahim, Gaddafi's spokesman, earlier told the Associated Press news agency in a phone call that Gaddafi was still in Libya and prepared to discuss the formation of a transitional government.
Ibrahim has been the most public face of the Gaddafi government in recent weeks, regularly addressing television cameras and journalists in Tripoli.
The phone call appears to represent a change of policy by Gaddafi who last week referred to the rebels as "thugs" and "rats" and urged loyalists to continue fighting even as his opponents seized control of Tripoli.
But a top official in the National Transition Council (NTC) told Reuters news agency that Libya's rebel government would not negotiate with Gaddafi unless he surrendered.
"No negotiation is taking place with Gaddafi," Ali Tarhouni, the NTC official in charge of oil and financial matters said.
Gaddafi's whereabouts remains unknown and rebels have offered a reward for his capture or killing.
Al Jazeera's correspondent James Bays reporting from Tripoli said: "the hunt for him [Gaddafi] goes on and one of the places that is still in the hands of Gaddafi forces is his hometown of Sirte."
Sirte is considered the last remaining bastion of support for the man whose decades-long rule of Libya is effectively over, with the rebel NTC now widely recognised as the country's legitimate government.
On Saturday the Arab League became the latest international body to recognise the NTC as it turned over the country's seat in the regional bloc to the rebel leadership.
Rebels claimed victory in Bin Jawad late on Saturday, advancing in their push towards Sirte.
Reporting from the city, Al Jazeera's Jacky Rowland said: "If, in fact, it is proven that the rebels are able to hold the town of Bin Jawad, then certainly they will have removed a major obstacle on the way to Sirte."
Mustafa Abdel Jalil, chairman of the NTC, said at a news conference on Saturday that rebel commanders were negotiating with Gaddafi loyalists in Bin Jawad to try to persuade them to surrender control over the city.
Vital supply route
Tunisian authorities have opened the main border crossing into Libya, Reuters reported on Sunday.
The opening of the border came after Libyan rebels defeated Gaddafi loyalists in skirmishes over a key border checkpoint with Tunisia, this is going to be a vital supply route into the war-ravaged country.
Gaining control of the Ras Ajdir crossing allows rebels to channel fresh supplies and aid to Tripoli, amid fears of a developing humanitarian crisis in the capital and elsewhere.
Al Jazeera's Sue Turton, reporting from Tripoli on Saturday, said the capture was an "incredibly important" gain for the rebels.
Tripoli faces severe water shortage
"It shows that they are managing to get rid of what is left of Gaddafi troops in that area, but more importantly it opens a supply route across from the west into Tripoli," she said.
In the capital, rebels were consolidating their control on Saturday, but the United Nations said security remained a key concern, with fears of reprisal attacks in a country now awash with small arms.
Ban Ki-moon, the UN secretary-general, also called on the international community to work together to restore order in Libya and for the fighting to end.
Following a UN meeting in New York, Ban said there was a "urgent need to put an end to the conflict and restore order and stability".
The nearly week-long fighting in Tripoli has left hospitals struggling to cope with the flood of wounded as supplies run scarce.
"Many of the residents in Tripoli have now run out of water, they need electricity to pump the water around the city and the electricity pumps have been hit," Al Jazeera's Turton reported on Saturday.