With British troops on standby to rescue an estimated 150 Britons in Libya, measures were being drawn up to close the British embassy in Tripoli.
However, the Foreign Office denied reports that the embassy would be closed as soon as this weekend.
"We will react to the situation as it unfolds on the ground. If it gets too dangerous for our people to be there, of course we will pull them out of there. But are we planning to close the embassy down? No," a spokesman was quoted as saying.
Anti-regime protests began Feb 14 across Libya against Gaddafi's 41-year-old rule. International organisations have said at least 2,000 people have been killed and thousands injured in clashes between protesters and government forces.
The US has already closed its embassy in Tripoli and imposed sanctions on Libya.
Britain's warnings to Libyan officials coincided with a joint British and French draft UN security council resolution that the Libyan leadership should face war crimes prosecution at the international criminal court for the crackdown on protesters.
The resolution also called for travel bans and asset freezes for Libya's leaders.
Gaddafi, however, showed no sign of heeding the warnings.
In a televised address Friday, Gaddafi appeared in Green Square and promised to arm his supporters.
"Retaliate against them, retaliate against them," he told his loyalists from the ramparts of a crusader fort overlooking the square.
"Dance, sing and prepare. Prepare to defend Libya, to defend the oil, dignity and independence," he was quoted as saying.
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