British foreign office has given Libyan embassy staff in London three days to leave saying Britain will officially recognize Libya's National Transitional Council as the "sole governmental authority” in the country.
Foreign Secretary William Hague said London will also unlock £91m of Libyan assets and hand them over the NTC members fighting Muammar Gaddafi regime.
Hague said the British government will expel all remaining Libyan diplomats in London and hand over the embassy to the NTC.
The Gaddafi regime has condemned London's move that followed similar announcements by France and the US with Libyan deputy foreign minister Khaled KArim saying Tripoli will use legal channels to reverse the decision.
The international contact group on Libya decided back in July that they should consider the NTC as the legitimate government authority in Libya.
"This decision reflects the National Transitional Council's increasing legitimacy, competence and success in reaching out to Libyans across the country," Hague said.
"Through its actions, the National Transitional Council has shown its commitment to a more open and democratic Libya, something that it is working to achieve in an inclusive political process. This announcement reflects the facts on the ground and to increase support for those fighting and working for a better future in Libya," he added.
This comes as analysts say unfreezing Libyan assets to the NTC officials is a move aimed at indirectly helping the council to access better military equipment to fight back Gaddafi forces that will help western forces in Libya out of the current military deadlock in the North African country.
Foreign countries that are enforcing a supposedly no-fly zone over Libya, which they claim is to protect Libyans from Gaddafi's fierce attacks, are not authorized to arm the NTC.
The foreign forces have been carrying out airstrikes on the country in the hope that they can force Gaddafi to step down but their campaign has only increased Libyans' suffering as several of the attacks have led to major civilian casualties without leading to gains on the ground.
The only alternative that seems to show the foreign forces a way out of the current mess seems to take the fight to Gaddafi forces on the ground that is only possible through arming the NTC, what they claim they are not doing.