"The veto [held by the five permanent UN members] is against the charter, we do not accept it and we do not acknowledge it," he said.
"Veto power should be annulled."
In a speech that far exceeded the 15-minute slot he was allocated, Gaddafi read aloud sections from a paperback copy of the UN charter; at one point, he held it up and made a small tear in the cover, signalling his disdain.
"The Security Council did not provide us with security but with terror and sanctions," he said.
Council members criticised
Gaddafi said the council, comprising the US, Britain, France, Russia and China, had failed to prevent or intervene in 65 wars that have taken place since the United Nations was established in 1945.
"How can we be happy about the world security if the world is controlled by four or five powers?" he complained. "We are just like a decor."
In his opinion, the General Assembly is the "the parliament of the world" - a 192-member body that should be dictating decisions to the Security Council.
In the past two decades, emerging economic powers such as Germany, India, Japan, and Brazil have called for reforming the composition of the Security Council and creating additional permanent member seats.
Veto power deplored
Gaddafi said adding more permanent seats would be counterproductive.
Instead, he called on regional federations and organisations, such as the Arab League, Organisation of American States, the African Union, and the Non-Aligned Movement to be given permanent seats at the Security Council.
The five permanent members should lose their veto, or the UN should expand the council with additional member states, Gaddafi said.
"It should not be called the Security Council, it should be called the 'terror council'," he said, adding that the permanent members treat smaller countries as "second class [and] despised" nations.
"Now, brothers, there is no respect for the United Nations, no regard for the General Assembly," he said.
'Disaster' for Africa
|The US senate condemned the celebrations in Tripoli after al-Megrahi's release [Reuters]
Mohamed Ben-Madani, editor of the Maghreb Review, told Al Jazeera's that Gaddafi's speech was a "disaster" for the African Union and Arab and Muslim delegations at the General Assembly.
"I think the Libyans deserve much better than this. It is a disaster for Arab world opinion. Tearing up the UN charter is shocking, but this should have been expected from the beginning," he said.
"He said nothing about Libyan human rights and better education [for Libyans]. He said nothing about climate change or the environment."
As Gaddafi spoke, the US senate approved a resolution condemning the "lavish" welcome-home ceremony that Libya gave last month for Abdel Basset al-Megrahi, who was convicted of the bombing over a US passenger aircraft over the Scottish town of Lockerbie in 1989.
The US senate demanded that Tripoli apologise for the celebration, which came after Scotland's justice minister released al-Megrahi, a former agent, on compassionate grounds.
Libya has a temporary seat on the Security Council until the end of 2010.
At one point, Gaddafi proposed a solution to the problem of illegal immigrants streaming from the North African coast to Europe.
"World colonial powers took the wealth from Africa, Asia, and Latin America so it is to be expected that the new generation of youth will follow that wealth," he said.
"Return that wealth, and you will see illegal immigration drop," he said.
He praised Italy for "apologising for its colonialist venture in Libya [in the 1920s]" and building hospitals throughout his country.
He called for $7.77 trillion in compensation to be paid to Africa from its past "colonial masters".
Gaddafi praised Barack Obama, the US president, describing him as a "son of Africa" and a "flash of light in the darkness".
He said he fully agreed with Obama's UN speech, describing it as unprecedented from a sitting US president.
Gaddafi, who was addressing the General Assembly for the first time since he seized power in his country 40 years ago, appeared to be rambling at times, reading from hand-written notes as he addressed dozens of issues.
At one point, he questioned the assassination of John F Kennedy, the US president.
"The assassination of Kennedy in 1963 - we want to know, who killed him? Lee Harvey? Why was Harvey killed?" he said, referring to the man who was arrested in connection with Kennedy's murder and shot dead while being transferred between jails.