The new Libyan leadership was recognized at a formal meeting Tuesday at the United Nations, where the new red, black and green flag of rebel fighters was raised alongside that of the UN, dpa reported.
Close to 60 government representatives, including 21 heads of state, attended the meeting to pursue talks on assisting Libya in reconstruction efforts and the establishment of democratic institutions.
Mustafa Abdul Jalil, president of the Transitional National Council, was recognized as head of state.
Abdul Jalil thanked the UN and the international community for its support in helping rebel fighters topple the regime of fugitive leader Moamer Gaddafi.
"Libya is a lesson in what the international community can achieve when we stand together as one," US President Barak Obama told Abdul Jalil, ahead of the UN meeting.
Turkish Prime Minister Recep Tayyib Erdogan, speaking for the first time at United Nations headquarters in New York, said some 25,000 had been killed, and were "martyred" and should be remembered for fighting for a better life.
The Transitional National Council has put the death toll variously at 30,000 and 50,000.
"I personally witnessed the demands for democracy and freedom," Erdogan said from the experience he acquired after visiting Tunisia, Egypt and Libya in the last weeks.
He urged the UN Security Council to return all frozen assets, which mostly belonged to Gaddafi and his family members, to the Libya people.
"We must return those assets to the Libyan people so they can live in dignity and honour," he said.
The council last week lifted the freeze of assets imposed on Gaddafi so the funds can be used by the council in reconstruction and humanitarian efforts.
Shortly before the UN meeting, the African Union (AU) recognized Libya's Transitional National Council as the representative of the Libyan people as they form an all-inclusive transitional government that will occupy the Libyan seat at the African Union.
The move comes after South Africa and other African states have voted last week against recognizing the council.
Gaddafi, whose whereabouts have been unknown since the rebels took control of Tripoli in August, claimed in an audio message aired on the Syria-based Al Rai channel that his regime cannot be ousted.
He said the Libyan people and tribes have declared that the TNC does not represent them and that his his regime would stay on because it was based on the people's will.
"The bombs of NATO planes will not last," he said, adding that a new regime cannot be imposed by military strikes.
For more than a week the rebels have been fighting Gaddafi's troops, who have put up stiff resistance in the coastal city of Sirte and the desert town of Bani Walid, south-east of Tripoli.
However, the rebels announced that they had taken over parts of the southern city Sabha, as well as its airport.
They were hoping to take control of Sirte, Gaddafi's birthplace, within a week, rebel spokesman Mohamed Ibrahim told the German Press Agency dpa.