Libyan rebels rule out any role for Muammar Gaddafi in a future government but could let him remain in a remote part of Libya as part of a settlement.

Tripoli - Libya's Muammar Gaddafi is willing to hold elections and step aside if he lost, his son said, an offer quickly dismissed on Thursday by rebels and the United States.

Gaddafi's son Saif al-Islam told Italian newspaper Corriere della Sera: “They (elections) could be held within three months. At the maximum by the end of the year, and the guarantee of transparency could be the presence of international observers.”

He said his father would be ready to step aside if he lost the election, though he would not go into exile.

Prime Minister Al-Baghdadi Ali Al-Mahmoudi later appeared to put the potential concession in question, telling reporters: “I would like to correct (that) and say that the leader of the revolution is not concerned by any referendum.”

He added that there was no reason for the Libyan leader to step down in any case, because he had not held any formal political or administrative post since 1977.

A visiting Russian envoy said Al-Mahmoudi had told him Gaddafi would not leave power.

Gaddafi's officials have in the past said an eventual election could be part of a deal to end the crisis, while asserting that the country would rally behind Gaddafi in any vote. Rebels, who rose up four months ago, say they will not trust a political process arranged with Gaddafi still in power.

The rebel leadership in the eastern stronghold of Benghazi dismissed Gaddafi's son's election offer as “wasting our time”.

“Saif al-Islam is not in a position to offer elections. Libya will have free elections and democracy but the Gaddafi family has no role to play in this process,” Jalal el-Gallal, a rebel spokesperson, told Reuters.

“These people are criminals, they have utter disregard for human life. They have to withdraw troops from our cities, allow humanitarian aid to reach people, they will face justice for their crimes. Only then we can talk about holding elections.”

A US State Department spokesperson also dismissed the election proposal, saying it was “a little late for that”.

The United States, Britain and France, which are leading Western air strikes on Gaddafi's forces, have said they will not stop bombing until Gaddafi leaves power.

The election proposal - which follows a series of moves the Libyan leader's officials portray as concessions but Western powers dismiss as ploys - comes at a time when frustration is mounting in some Nato states at slow military progress.

Four months into the conflict, rebel advances towards Tripoli have been slow, while weeks of Nato air strikes pounding Gaddafi's compound and other targets have failed to end his 41-year-old rule over the oil-producing country.

The Russian envoy, Mikhail Margelov, said after talks with Mahmoudi that the issue of Gaddafi's departure from power was a “red line” the Libyan leadership was not willing to cross. He said his task was to soften that position through negotiation.

“I can say that today I am a cautious optimist regarding the resolution of the Libyan crisis,” he said.

Late last month Moscow joined the West in calling for Gaddafi to step down, a major diplomatic setback for the leader.

The Nato intervention in Libya has been going on for longer than many of its backers anticipated, and the strains are beginning to show within the alliance.

Nato officials have said they may not have the resources for a sustained campaign, and Republicans in the US Congress have questioned the legal grounds for continued US involvement.

House of Representatives Speaker John Boehner said lawmakers had options for dealing with the conflict, including “the power of the purse” - an implicit threat to cut off funding.

Mahmoudi appeared to seize on Washington's disunity.

“We are following the discussion at congress, we are assessing the matter and seeing which way they are going. We are still hoping for a better relationship with the United States based on mutual respect,” he said.

Libya-watchers say Gaddafi is using his political skills, honed during decades when he was able to survive despite being an international pariah, to try to exploit divisions within the fragile Western alliance ranged against him.

Adding to the pressure on Nato, Russia and China issued a joint declaration underlining their concerns about the air strikes. The declaration was signed in Moscow by Russian President Dmitry Medvedev and Chinese President Hu Jintao.

“To avoid further escalation of the violence it is necessary to provide for the meticulous adherence by all sides involved” to United Nations resolutions on Libya, the document said.

Russia and China both decided in March not to use their veto power to block air strikes on Libya, but have said Nato risks going beyond the UN-authorised mandate to protect civilians. - Reuters