Libya's army says it will halt operations from Sunday to allow rebels to lay down their arms, softening repeated threats by Moamar Gaddafi to crush them.

With urgent talks under way at the UN Security Council, amid warnings of an imminent bloodbath in the oil-rich North African nation, insurgents claimed they had shot down warplanes trying to bomb their bastion of Benghazi and also disputed claims of territorial gains by Gaddafi forces.

Diplomats at the UN Security Council said a draft resolution being negotiated by major powers calls for all necessary measures short of an occupation to protect civilians, and a meeting was set for Thursday afternoon to discuss it.

"That is the draft resolution now, but it could still change," said a Western diplomat, while the French foreign ministry said the draft "widens the scope of sanctions and opens way to the use of necessary means to stop the Gaddafi offensive."

In Tripoli, state news agency Jana said "the provisional general committee (ministry) of defence has decided to halt military operations against the armed terrorist bands from midnight on Sunday (2200 GMT) ... to give (them) a chance to lay down their arms and benefit from a general amnesty."

It was not immediately clear why the regime was softening its stance, when Gaddafi's son said earlier this week the rebels would be vanquished by Friday and the leader himself had promised the final assault on Benghazi.

On Wednesday, UN Secretary General Ban Ki-moon called for an immediate ceasefire, but there was no evidence Gaddafi was acting to honour that.

AFP