NATO defence ministers agreed to renew military planning for a no-fly zone pending a UN mandate, setting the stage for an EU summit to ponder the next step to take.

As officials talked, Kadhafi's son Seif al-Islam said victory was "in sight" against the rebels, warning that their hold on the east of the country was now under threat.

"We're coming," Islam said, referring to the advance of government forces toward the rebel bastion of Benghazi in eastern Libya.

"I send a message to our brothers and friends in the east who are sending us daily calls for help and asking us to rescue them: We're coming," he told an exuberant crowd of hundreds of youths.

"Victory is in sight. Victory is near ... I swear before God that we're going to win."

If confirmed, such success could hugely complicate the West's problems in working out what to do now in Libya.

French President Nicolas Sarkozy favours air strikes on Kadhafi's command base, a source said earlier Thursday, and will propose at the summit "striking an extremely limited number of points which are the source of the most deadly operations" by Kadhafi's forces.

Defence ministers "decided to increase the presence of NATO maritime assets in the central Mediterranean," NATO Secretary General Anders Fogh Rasmussen said.

The ships would bolster surveillance of Libya and monitor an existing arms embargo against the country but no decision to launch a no-fly zone -- a step favored by Britain and France -- was made.

"Further planning will be required," Rasmussen said.

European Union foreign policy chief Catherine Ashton said any military intervention was contingent on the Arab League, which is meeting this weekend.

"It must be Arab-led," she said of any intervention. "We have to work closely with the region in our approach."

A NATO diplomat said three more warships and a number of minesweepers would be moved towards Libyan territorial waters in addition to vessels already deployed by alliance states.

The United States has already sent three warships to the area with hundreds of Marines on board but defence chiefs acknowledge that a "clear legal basis" in the form of a new United Nations Security Council resolution will be needed to police an existing arms embargo.

"Even when it comes to the embargo, (the current resolution) does not provide the authority for enforcement," US Defence Secretry Robert Gates said.

France became the first state to recognise Libya's opposition as its rightful representative and Britain also described the Libyan opposition as "valid interlocutors" as the EU adopted new sanctions targeting Libyan financial groups.

Portugal's Foreign Minister Luis Amado, who the previous day met a Kadhafi envoy in a Lisbon hotel, said he sent a message to Tripoli via the emissary saying: "The Kadhafi regime is over."

The stakes are high -- soaring oil prices as Libyan output is cut threatens to drive inflation and Europe fears a tidal wave of migrants crossing from north Africa -- along with the risks of firmer action.

"We do not want to get sucked into a war in North Africa," said German Foreign Minister Guido Westerwelle.

The leaders of the 27-nation European Union will examine on Friday the prospects for military intervention via a no-fly zone, humanitarian aid and economic measures.

The EU is also expected to address a looming humanitarian crisis and take a new line on its southern neighbours as popular uprisings across the Arab world threaten to up-end the old order.

"We support continued planning with NATO Allies and other partners, including those in the region, to be ready to provide support for all possible contingencies as the situation evolves, including a no-fly zone," said draft summit conclusions obtained by AFP.

If Britain and France are leaning towards no-fly zone, others were mindful of not repeating the mistakes of the past, especially the Iraq quagmire.

"This should not be seen as foreign intervention. This is not Iraq," Finland Foreign Minister Alexander Stubb said.

The three sites being considered as targets by Paris are Kadhafi's Bab al-Azizia command headquarters in Tripoli, a military air base in Syrte, east of Tripoli and another in Sebha in the south, the diplomatic source added.

Sarkozy's office declined to confirm the claim about Sarkozy's air strike proposals. "We are not there yet. We are first going to ask for legal authorisation to prevent the use of force by Kadhafi," an official told AFP.

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