Tripoli (AFP) - Libya's UN-backed unity government moved to cement control over the country's finances and institutions Wednesday after the rival administration in Tripoli ceded power in a boost to efforts to end years of chaos.

The concession late Tuesday by the militia-backed administration that had controlled Tripoli since 2014 was a major about-turn for a body that had made every effort to block the arrival of prime minister-designate Fayez al-Sarraj.

It came after UN envoy Martin Kobler held talks with Sarraj at the naval base where he has established his headquarters since his arrival under escort by sea last Wednesday.

The international community has pleaded with Libya's warring sides to stand behind the unity government, which it sees as vital to tackling a jihadist expansion and rampant people smuggling in the North African state.

The Government of National Accord has yet to secure a similar concession from another rival administration based in the far eastern town of Tobruk, which has long claimed international legitimacy because it was appointed by the parliament elected in the last polls in 2014.

- Italy hails 'encouraging' moves -

In a directive published on its official Facebook page on Wednesday, the GNA ordered all government "ministries and institutions and committees" to respect its authority and use its logo.

It also ordered the Central Bank and the Audit Bureau to freeze all state accounts immediately, except for salary payments to government employees.

The Tripoli-based administration had said it was stepping aside in the national interest.

"We inform you that we are ceasing the activities entrusted to us as an executive power," it said in a statement.

The statement, bearing the logo of the so-called National Salvation Government headed by Khalifa Ghweil, said the unrecognised Tripoli prime minister, his deputy premiers and cabinet ministers were all stepping aside.

It said the Tripoli authorities took the decision to quit because they were determined to "preserve the higher interests of the country and prevent bloodshed and divisions."

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Italian Foreign Minister Paolo Gentiloni said recent developments were "encouraging" in moving towards a "united, stable and secure Libya".

"I hope that the spirit of compromise prevails on all parties involved," he said in a statement, offering the full support of Italy, the former colonial power in Libya, to the new government.

The UN Libya envoy, in Tripoli on his first visit since Sarraj's arrival, hailed the announcement as "good news" but added that "deeds must follow words".

Kobler praised the "courage and determination" of the unity government, whose growing authority has raised hopes it will be able to restore some stability in Libya, which has been plagued by chaos since Moamer Kadhafi's 2011 overthrow.

"We want to show that the UN and the international community support Prime Minister Sarraj and members of the presidency council," Kobler told AFP.

- UN offers 'all support needed' -

He said the UN was ready to provide "all the support needed" towards an "immediate and peaceful handover of power".

The unity government was formed under a power-sharing deal agreed by some lawmakers in December.

The new administration had in recent days been broadening its support, winning the backing of the Libyan Investment Authority, the National Oil Corporation and the Central Bank.

Mattia Toaldo, a policy fellow at the European Council on Foreign Relations, said Kobler's visit was a clear signal that the GNA was putting down roots in the capital.

"Kobler's visit to Tripoli, after the many times he was refused landing and access... shows the degree of control of Tripoli by the GNA," Toaldo said.

An adviser to Kobler said the UN envoy discussed with Sarraj "ways to support the action" of the unity government.

Western governments are deeply concerned that Libya's disarray has allowed the jihadist Islamic State group to gain an important foothold in the country, but have said a foreign intervention can only take place at the request of a unity government.