|Anti-Gaddafi fighters control large parts of Libya, including some of the cities around the capital Tripoli [AFP]
A UK diplomat and a special forces team accompanying him are said to have been taken captive by Libyan rebels in the town of Benghazi, Libya's second city.
Sources in Benghazi confirmed that they were holding members of a British special forces team, saying that they were treating them well.
"They [the fighters] did capture some British special forces. They could not ascertain if they were friends or foes," the Reuters news agency reported a source in rebel-held Benghazi as saying.
"For our safety we are holding them and we expect this situation to be resolved soon."
The Geneva-based Human Rights Solidarity group, which employs a number of Libyan exiles, also said that an eight-person special forces team had been captured.
The UK's Sunday Times newspaper earlier reported that Libyan rebels had captured members of Britain's elite special forces, the Special Air Service (SAS), in the east after a secret diplomatic mission to make contact with Libyan opposition leaders backfired.
Fuelling speculation, Liam Fox, the British defence minister, speaking on BBC television, confirmed that a diplomatic mission team was in Benghazi.
"I can confirm that a small British diplomatic team is in Benghazi," he said. "We are in touch with them but it would be inappropriate for me to comment further."
The Sunday Times claimed that the uninvited appearance of the SAS alongside the diplomat "angered Libyan opposition figures who ordered the soldiers to be locked up in a military base".
Libya has seen weeks of violence in protest against the rule of Muammar Gaddafi, the Libyan leader, with much of the country - the east and many cities around the capital - now thought to be held by anti-Gaddafi fighters.
World leaders, including Britain, have condemned Gaddafi's use of force against his own people in attempting to quell the protests.
The Sunday Times said that a British source, who confirmed the men had been detained, said the diplomat they were protecting had wanted to make contact with the rebels to prepare the way for a visit by a senior colleague.
Opponents of Gaddafi "fear he could use any evidence of Western military interference to rally patriotic support for his regime", the paper said.
Rory Challands, Al Jazeera's correspondent in London, said the situation appears to have put the British government in an awkward position.
"The SAS is widely thought of - at least inside Britain - as being one of the best-trained special forces units in the world, so for them to have been taken captive by a reasonably small group of rebels would be rather humiliating for them," he said.
"But it's also quite embarrassing for the British government because if they are making these secret efforts at diplomatic contact with opposition forces inside Libya, then this will have blown that right open and those are the kind of negotiations that Britain would rather keep under wraps."
David Cameron, the UK prime minister, last week said Western countries should be stepping up contact with the Libyan opposition to gain a greater understanding of their intentions.
He also courted controversy by suggesting the UK might be willing to arm rebel fighters in Libya.
Source: Al Jazeera and agencies