Angry crowds went on the rampage in Tripoli yesterday, burning foreign embassies and forcing the UN to evacuate its foreign staff after a Nato bombing that the regime claimed left four members of Muammar Gaddafi's family dead.

The fallout from the air attack forced Nato onto the defensive and prompted its leaders and David Cameron to claim that the attack was in line with the UN Security Council resolution to target the regime's "war-making machine".

The Libyans claim the attack, which allegedly killed one of the Libyan leader's least known and least politically active sons, as well as three grandchildren, was a failed "assassination attempt" on Colonel Gaddafi. Russia, which abstained in the Security Council resolution that paved the way for air attacks in Libya, led the criticism of the raid, saying it raised "serious doubts" over Nato assurances that the allies were not targeting the Gaddafi family.

As mobs launched revenge attacks on international targets in the capital, the UN airlifted its international staff out of the Libyan capital and the British and Italian missions were left in flames. Britain expelled Libya's ambassador in London in response to the burning of its embassy, which was closed in February. UN officials confirmed that its Tripoli office was also ransacked and Italy said a number of other foreign missions had been attacked.

There has been no independent confirmation of claims that Colonel Gaddafi's son Saif al-Arab, 29, or any of the Libyan leader's grandchildren, all aged under 13, were killed in the blast at a residential compound in Tripoli on Saturday. However, state television showed the bodies of four people it said were the victims of the air strike.

The Tripoli government's spokesman, Moussa Ibrahim, said that Saif al-Arab "was playing and talking with his father and mother and his nieces and nephews" when Nato bombs hit. He said that Colonel Gaddafi escaped unhurt. The incident recalled the controversy over the US bombing of Tripoli in 1986 in which the Libyan leader's adopted daughter was said to have been killed.

Reporters allowed to visit the scene with government minders yesterday described a single-storey building with a demolished ceiling and a deep crater revealing a ruined basement. Video games and cooking pots lay scattered around, amid twisted metal and pieces of concrete.

A senior former Libyan diplomat, who has resigned from the country's diplomatic service but has yet to come out openly against the regime, said: "There is anger about these deaths, and a lot of the protests have not been organised by Gaddafi's people, they are spontaneous. Gaddafi will use this for propaganda and Nato is playing into his hands."

However, the regime's claims were dismissed by Libya's internationally recognised government in Benghazi, the Provisional National Council. "This was a stunt used for propaganda and to create splits in Nato," a senior council official told The Independent yesterday.

There is widespread scepticism in opposition-controlled Libya over the alleged death of Saif al-Arab. The official, who cannot be named, said that even if the deaths were real, they were justified under the UN mandate to protect civilians. "We believe that Nato would be right to attack the leader of the militia that is killing thousands of Libyan civilians," he said.

Hours before the announcement of the deaths and a stage-managed media tour of the destroyed compound in Tripoli, Colonel Gaddafi gave a rambling speech offering a ceasefire but refusing to discuss standing down. "We are seeing the last dance of the dying rooster," the council official added.

Prime Minister David Cameron, who avoided mentioning the claimed fatalities, said the strike was in line with the UN mandate to prevent civilian deaths. "The targeting policy of Nato and the alliance is absolutely clear," he said. "It is in line with the UN resolution 1973 and it is about preventing a loss of civilian life by targeting Gaddafi's war-making machine, so that is obviously tanks and guns, rocket launchers, but also command and control as well."

Nato confirmed that it had targeted a "command and control" centre but denied targeting individuals and pointed out that the alleged deaths had not been confirmed. The alliance has, however, refused to specify just which military operations were being planned from the site, and the deaths, especially those of the children, if confirmed, will not only lead to strong criticism from countries such as Russia and China, but also reinforce the unease felt by some member states, such as Turkey and Greece, about the direction of the air campaign.

While no one in Nato will admit to directly targeting Colonel Gaddafi, some hope that if the Libyan leader were to be killed in an airstrike, it could hasten the regime's collapse. "It all depends where he is at the time," said a government source. "He is the person who is charge of those forces which are targeting civilians and he could conceivably be near those command and control structures." Russia, which has been critical of Nato bombings in Libya, said the latest incident cast serious doubt on coalition claims "that the strikes on Libya are not aimed at the physical destruction of ... Gaddafi and members of his family".

Moscow has repeatedly called for a ceasefire in Libya and negotiations without preconditions, but has stopped short of raising the matter at the UN Security Council.