Nicolas Sarkozy is leading the calls for a Nato-imposed no-fly zone to be enforced over Libya to "prevent the use of that country's warplanes against [its] population".

Sarkozy, the current president of the G8 and G20 economic forums, has also called for the European Union to impose sanctions against Libya and suggested that the assets of the family of the Libyan leader, Muammar Gaddafi, should be frozen.

William Hague, the British foreign secretary, did not join the calls for a no-fly zone, but David Cameron held out the prospect of imposing sanctions on Libya if Gaddafi continued to respond to the protests with violence.

The government is wary of antagonising the Libyan leadership while it attempts to repatriate British citizens.

In an interview with al-Jazeera television in Doha, the prime minister said: "Sanctions are always an option for the future if what we are seeing in Libya continues. Of course, if Libya continues down this path, there will be a very strong argument [for sanctions]."

Cameron's remarks appeared to be a hardening of his position from earlier in the day, when he sidestepped questions about whether he would endorse the French president's call for sanctions.

But the prime minister moved to play down the prospect of military action against Libya, saying: "I do not think we are at that stage yet. We are at the stage of condemning the actions Colonel Gaddafi has taken against his own people."

It is likely the British attitude towards a no-fly zone will toughen if and when its citizens are evacuated.

The government is also concerned that Russia and China could veto a no-fly zone at the United Nations security council, leaving the international community weakened.

Demands for a ban on flights over Libya have been made by Ibrahim al-Dabashi, the country's deputy ambassador to the UN, who is among diplomats who have abandoned Gaddafi.

He said the measure would prevent mercenaries, weapons and other supplies from reaching Gaddafi and his security forces. There have also been fears that Gaddafi could resort to bombing his own people.

Hague said he was cancelling a planned trip to Washington to handle the crisis from London, adding that it would be difficult to get a security council resolution. The council has, though, made a statement condemning Libya's actions.

Hague stressed he wanted an international inquiry into possible war crimes, saying this represented the best chance to stop murder and atrocities by the regime. "They will be held to account. They should hear that message loud and clear," he said.

British diplomatic sources stressed they were not supporting a no-fly zone at this point, because there are fears that too belligerent a western stance might serve to unite some Libyans behind Gaddafi.

Speaking on BBC Radio 4's Today programme, the former foreign secretary Lord Owen became the first British politician to call for a no-fly zone, adding that the west should be concerned about the possibility that Gaddafi would unleash chemical weapons.

"We know that this is a person who could unleash either chemical or biological weapons, which he possibly still has. He is one of the worst despots we have seen for many a century. He is deeply unstable, and has been for 42 years," Owen said.

He called for a UN charter chapter 7 intervention – meaning the authorisation of military and non-military means to "restore international peace and security" – to be enforced by Nato air forces with Egyptian military support to demonstrate regional backing for the effort.

He argued a no-fly zone similar to the one imposed on Saddam Hussein's Iraq in 1991 was feasible and wholly desirable. He said he believed the US would already have put its planes on alert.

Sarkozy went further than any other leading EU politician in calling for military action. "The continuing brutal and bloody repression against the Libyan civilian population is revolting," he said. " The international community cannot remain a spectator to these massive violations of human rights."

The scale of the threat to world security was underlined by reports suggesting Gaddafi had ordered the destruction of oilfields, as well as the growing likelihood that he was willing to see a massive death toll rather than relinquish power.

Sir Jeremy Greenstock, Britain's ambassador to the UN at the time of the invasion of Iraq in 2003, counselled against a no-fly zone, saying there would be strong resistance from China and Russia since they would not want a precedent that might affect them.

He said: "We all know from recent history that interventions of this kind tend to have consequences you haven't foreseen, and I don't think we could get it together quickly enough."

The EU haspushed for an independent, UN-led investigation into the killing of protesters and other human rights abuses allegedly committed by Libyan security forces, saying they "may amount to crimes against humanity".

The proposal was contained in a draft resolution tabled by EU members ahead of Friday's emergency meeting on Libya of the Geneva-based UN human rights council.

The German foreign minister, Guido Westerwelle, agreed with Sarkozy that sanctions would be "inevitable" if the Libyan regime continued to put down protests so violently.

"There is a great deal of agreement with many partners in the European Union here," he said. "If this violence continues, everyone in Europe will know that this cannot go unanswered.

"I cannot imagine that, given these terrible pictures, these terrible events in our immediate neighbourhood, any other policy is possible in Europe."