TRIPOLI (AFP) – Terrified residents braced Saturday for bloody battles in an eerily quiet Tripoli after Moamer Kadhafi offered to arm Libyans to defeat a popular revolt that poses the worst threat to his four-decade rule.

The UN Security Council was to meet in a special session to consider a sanctions resolution against Kadhafi on top of those imposed by US President Barack Obama and the European Union in a clear attempt to weaken the teetering regime.

The escalating revolt to overthrow Kadhafi, which a Libyan diplomat to the United Nations said has killed thousands, has seen opponents grab almost the entire east and loyalists embark on shooting sprees in the capital.

A Tripoli resident who spoke to AFP by telephone said the streets were semi-deserted on Saturday afternoon, though people had earlier gone out to buy bread and petrol, with long queues at service stations.

He said the city was still controlled by Kadhafi, with tanks and all-terrain vehicles driven by regime partisans patrolling the streets.

But he said there was no sign on the street of the African mercenaries that have reportedly been working for Kadhafi since trouble broke out on February 15, and that this was a worrying sign.

"There are no more mercenaries, and that's serious because that means it will be Libyans against Libyans and the risk of civil war."

"There were rumours that Kadhafi's men would attack," he said after the Libyan leader rallied supporters on Friday to "defend Libya."

"But the night was calm, with armed (Kadhafi) partisans going round, knocking on doors and telling people to stay inside," he added.

Amid the fear, he said there had been no calls on Facebook or telephone text for people to turn out to demonstrate.

Others in Tripoli said two of the capital's three five-star hotels were closed and that the third, the Corinthia, had started to evacuate.

With banks closed, the black market rate for the dollar was two Libyan dinars, compared with 1.30 10 days ago, and the euro was at 2.50 dinars compared with 1.70.

Another source in Tripoli said he had been talking to a friend in Misrata, some 150 kilometres (90 miles) to the west, who said Kadhafi forces were attacking the local radio station, controlled by the opposition, and that he could hear the sound of heavy weapons over the telephone.

Libya's UN ambassador, a childhood friend of Kadhafi, delivered an emotional speech to the Security Council, raising the spectre of Hitler, Stalin and Pol Pot, asking for his country to be saved.

After Mohammed Shalgham's speech, one Tripoli resident told AFP by telephone that "people shouted with joy" but that just a few minutes later the electricity was cut and had not come back since.

"We were terrified. We thought that meant they were preparing for attacks. We grabbed whatever we could use as weapons and stayed by the door in case anyone broke in," the resident said.

"We could still hear gunfire all night," the source said, in contrast to the other witness.

Almost the entire east of Libya has slipped from Kadhafi's control since the popular uprising began in the port city of Benghazi on February 15, inspired by the revolutions in neighbouring Egypt and Tunisia.

And Italian Prime Minister Silvio Berlusconi, whose country is the former colonial power in Libya, became the first Western leader to suggest Kadhafi appeared to have lost control of the situation.

"If we can all come to an agreement, we can end this bloodbath and support the Libyan people," he said.

In Benghazi, a spokesman for the revolution told AFP on Saturday they were drawing up plans for a transitional government to take power.

"We are all waiting for Tripoli to end Kadhafi and his sons' rule," said Abdelhafiz Ghoqa.

In the nearby town of Ajdabiya, the main square has been named Hurriya (Liberty) Square, but residents said conditions were miserable.

"The situation is bad. The bakeries are closed. Finding food is very hard. I have never seen a happy day in all of my years," said Idriss Mohamed, who at 42 is as old as the regime.

The UN's World Food Programme warned on Friday the food distribution system was "at risk of collapsing" in the mainly desert North African nation which is heavily dependent on imports.

Foreign governments have scrambled to evacuate thousands of expatriates who told of scenes of hell since the crisis broke out 12 days ago.

In Washington, State Department spokesman Philip Crowley said there may be Americans still in the country and that a task force was assisting them.

After massive protests in Tunisia and Egypt forced the resignations of longtime leaders Zine El Abidine Ben Ali and Hosni Mubarak, the Libyan strongman appeared to dig in for a bitter fight to the end.

In a brief but chilling address that presaged a bloody battle for the capital, the army colonel who grabbed power in 1969 told frenzied supporters in Tripoli's Green Square on Friday that the rebels would be defeated.

"We will fight them and we will beat them," he told a crowd of hundreds. "If needs be, we will open all the arsenals."

Obama issued an executive order, seizing assets and blocking any property in the United States belonging to Kadhafi or four of his sons, saying the measures were not targeting the wealth of the Libyan people themselves.

He condemned the Libyan government?s violation of human rights, "brutalisation of its people and outrageous threats".

UN chief Ban Ki-moon has demanded decisive action by the Security Council, warning any delay would add to the growing death toll, which he said came to more than 1,000.

Britain, France, Germany and the United States have drawn up a resolution which says the attacks on civilians could amount to crimes against humanity.

It calls for an arms embargo and a travel ban and assets freeze against Kadhafi and his entourage.

Analysts warn the collapse of Kadhafi's dictatorship would leave an enormous power vacuum in a divided country with weak institutions in which the east, west and south have long had strong regional identities.

"Entirely unclear is what glue will hold together this largely decentralised country, in which nationalist identification is low, and tribal and clan affinity paramount," wrote Robert Danin, a Middle East expert for the Council on Foreign Relations.