"My family had to leave Libya just to survive," says a young bearded man in spectacles, perching awkwardly on a white leather sofa. We are in the front room of Saif al-Islam al-Gaddafi's mansion in Hampstead Garden Suburb, recently expropriated by activists working in alliance with Libyan exiles. An hour earlier, I had passed through an open window near some ugly imported ferns belonging to Muammar al-Gaddafi's son, having been invited to meet the members of the new Free Libyan Embassy.

We drink stewed tea from Saif's best china and eat cheese sandwiches using his silver cutlery, while the young man, Abdulla, tells me about how his uncle was "disappeared" by Saif's father. "In Libya, people disappear all the time. There was a prison massacre where 1,200 people died. They poured cement over the bodies." Abdulla nervously adjusts his glasses. "It's important that people know we're not creating a civil war for no reason."

Nearly every room in this enormous house boasts a large, flat-screen television. The occupiers have set each one to al-Jazeera, for rolling coverage of the people's revolutions that are sweeping the Arab world. Televised gunfire echoes in the marble hallway as Jay, 25, explains how activists from the London squatter movement took over the Gaddafi mansion, moving in secretly and putting up notices declaring their intention to hold the empty house under English common law. "We wanted to show our solidarity the best way we know how," he says.

“It's a symbolic and practical reclamation of private property that belongs to the Libyan people. It's about their struggle, which is why the place has been handed over to the Libyans as a place to organise and a safe space for refugees," Jay says. "People have been arriving in support from all over the UK." The tabloids have portrayed the occupiers as drunken anarchists but this is, in Jay's words, "total bollocks". "On the first night, people came down thinking there would be a squat party and we turned them away. They didn't seem to realise how seriously we're taking this," he explains.

“At first, we were elated that we'd managed to pull it off. Then the Libyans turned up and they were elated. But once they started to get reports about family and friends being killed, the atmosphere changed. We were watching Zawiyah burning on al-Jazeera and someone saw his own house. It was terrible."

Jay takes me on a tour over four floors of hushed opulence, each several times the size of an ordinary London flat. "It's worth nearly £11m," he says. Under the kitchen is a cosy entertainment complex, complete with pool, Jacuzzi, sauna and a private cinema done out in suede, the pews so thick and warm you could sleep on them – which people have been doing. On the corner of one aisle a bare duvet lies, neatly folded. Everything here is white, bright and glistening: white leather sofas, marble floors, silver candlesticks adorning pristine white walls. The only note of colour is in one of the guest bedrooms, where a Libyan flag has been draped over the TV.

Fuelling anger

Fearing the spectacle of bailiffs dragging Libyans out of the private property of a Gaddafi, at a time when the UK government is desperately downplaying its erstwhile support for the dictator, the authorities have kept their distance. But that doesn't mean that there have been no attempts to get the occupiers to leave.

“Last night, at about four in the morning, someone came to the door," Jay says. According to Abdulla, "It was a well-dressed Arab person, [wearing] nice clothes and gold. When I asked him what he was doing here so late, he said, 'I want to make you an offer.' He told us: 'I have £40,000 in cash. You can have it if you leave immediately.' No amount of money could make us leave this house. It's not a financial issue."

On the sofa opposite, a quiet man called Ambarak suddenly speaks up in Arabic. "What's a life worth?" he says, as Abdulla translates softly. "What are 100,000 lives worth?" Ambarak perches on the edge of the sofa, looking out of place in his keffiyeh and scuffed trainers. "I'm talking about people being shot by snipers in the street. I'm talking about family members selling dry bread to live.

“They ask what the west should do, but they've known about [Muammar] Gaddafi for years," he continues in broken English. "They did nothing. The petrol . . ." – he rubs his fingers together in a "money" gesture, grinning without humour. "My brother has disappeared in the fighting. We haven't heard from him, we have no way of contacting him." Ambarak goes very quiet. "Excuse me, please. I must go and pray."

"The resources that come out of Libya should belong to the people but that petrol money goes somewhere else," says Abdulla. "All those close to Gaddafi have places like this to live. There are some who are heartless and will do anything for a comfortable life."

Ambarak's family is in Misurata, where fierce fighting continues. "They say on the phone that they can hear shooting and tanks are coming down the street. My cousin has died, [as have] my friend, my neighbours."

An influx of neighbours bearing food terminates the interview. A young man wearing a Libyan flag like a cape takes the cups politely to the sink. He is a long way from home. "We all want to go home," says Abdulla. "But not to Libya as it is now."

The Libyans involved in this article wanted their names to be known; other names have been changed. Anyone wishing to support the Free Libyan Embassy can send a donation to wmclibya.org