Gunmen from a former rebel militia stormed and occupied the office of Libya's interim prime minister, Abdurrahim al-Keib on Tuesday.

At least one man was reported killed, paramedics said. Several dozen pickup trucks with heavy machine guns surrounded the building as government negotiators met the former rebels, who are demanding back pay they say they are owed.

The attack caused pandemonium when the militia, from Kikla, a town in the Nafusa mountains, 70 miles south-west of the capital, attacked in the morning.

Gunfire echoed as militiamen stormed the front gates and main entrance as staff fled the building. Keib was reportedly not in the building. His whereabouts were unknown.

Streets around the office, near the headquarters of Libya's National Oil Corporation, were closed by local militias in the absence of an effective government police force.

"The guys from Kikla are inside," said Tripoli militiaman Abdul Zeli, sitting in a Jeep outside the building. "I was woken in the morning and told to come here by my brigade commander. We have a small problem."

Periodic bursts of machine gun fire echoed from the building compound, which has been home to the prime minister since the interim government was sworn in last November.

The protest follows week of rising tension, with militias across the country demanding to be paid as Libya's oil revenues balloon. The ruling National Transitional Council made a one-off payment of 500 dinars (£250) earlier this year but it was halted amid allegations of fraud.

Deadlock on back pay saw another militia from the Nafusa mountains delay handing the capital's airport back to government forces until last month.

In the streets surrounding the office, there was sympathy from ordinary Libyans for the militia demands. "These militias made the revolution but they don't get paid," said Moatasem Sotni, a Tripoli hotel worker standing under the flyover leading to the roadblocks.

As gunfire echoed through the streets he added: "There is nothing to fear from these guys [the Kikla militia]. They want to be paid. There is plenty of money now in Libya, you can believe it, they should pay them."

The attack will cause huge embarrassment for a government which has failed to exert control over the militias that fought in the revolution last year to oust Colonel Muammar Gaddafi.

Elections are due next month, but some diplomats question whether the chaos and sporadic inter-tribal warfare will make them impossible.