Libya’s rebels took control of most of Tripoli in a lightning advance Sunday, celebrating the victory in the city’s symbolic Green Square, as Muammar Gaddafi’s defences collapsed with little resistance.

The rebels were welcomed by thousands of jubilant civilians who rushed out of their homes to cheer the long convoys of pickup trucks packed with fighters, who linked up with comrades said to have infiltrated the city in recent days.

Tens of thousands of Libyans in Benghazi celebrate the near total fall of Tripoli into rebel hands on Sunday. Photo AFP

Large crowds also celebrated in the streets of Benghazi, the rebels' de facto capital hundreds of miles to the east. Amid fireworks and celebratory gunfire, they cheered and waved the rebel tricolor flags, dancing and singing in the city's main square.

Two of Libyan leader Muammar Gaddafi’s sons are in rebel custody, though the whereabouts of Gaddafi himself are not known.

Gaddafi forces still control parts of the city, including the areas around Col Gaddafi's Bab al-Azizia compound and near the hotel where foreign journalists are staying, south of the city centre.

Green Square has already been renamed Martyrs Square by the rebels.

The startling rebel breakthrough, after a long deadlock in Libya's 6-month-old civil war, was the culmination of a closely coordinated plan by rebels, NATO and anti-Gadhafi residents inside Tripoli, rebel leaders told Associated Press.

President Barack Obama said Libya is "slipping from the grasp of a tyrant" and urged Gadhafi to relinquish power to prevent more bloodshed.”

"The future of Libya is now in the hands of the Libyan people," he said.

On Sunday, rebel fighters from the west swept over 20 miles in a matter of hours, taking town after town and overwhelming a major military base as residents poured out to cheer them, while at the same time, Tripoli residents secretly armed by rebels rose up.

When rebels moved in, the regime unit guarding the capital, known as the Mohammed Megrayef battalion, surrendered and its commander ordered its troops to put down their arms. Its commander is said to have been working for the rebels for months.

The six month armed struggle to topple Gaddafi’s regime has been closely supported by NATO airstrikes.

Nonetheless, the rebel victory Sunday was a stunning reversal for Gadhafi, who earlier this month had seemed to have a firm grip on his stronghold in the western part of Libya, despite months of NATO airstrikes on his military.

The rebels had been unable to make any advances for weeks, bogged down on the main fronts, outgunned by the regime’s military and short of weapons and at times ammunition.

NATO Secretary-General Anders Fogh Rasmussen said Sunday Gaddafi's regime was "clearly crumbling" and that the time to create a new democratic Libya has arrived.

Aircraft from Britain and France have led NATO's attacks, supported by the United States and other countries. They are operating under a United Nations mandate provided by Security Council resolution 1973.

British Defence Secretary Liam Fox said Monday:

“We believe the regime is behaving with excess at the moment against the civilian population. The time for Gadaffi to go has long since passed. In its final days the regime is carrying out vindictive attacks which we have information about and we have been carrying out surgical counter-attacks."

Libyan leader Muamar Gaddafi with Sri Lanka’s president Mahinda Rajapaksa pictured in 2009 at the 40th anniversary celebrations in Tripoli of the 'Great September Revolution'. President Rajapaksa was also the first Sri Lankan head of state to visit Libya. Gaddafi hailed Rajapaksa’s victorious onslaught against the Tamil Tigers, saying it was an example to the world, press reports said. Sri Lankan troops also marched in Gaddafi's celebration parade.

Gaddafi is the Arab world's longest-ruling leader - presiding for 42 years over the North African desert nation with vast oil reserves and just 6 million people.

The rebels' leadership National Transitional Council, based in the eastern city of Benghazi, sent out mobile text messages to Tripoli residents, proclaiming, "Long live Free Libya" and urging them to protect public property.

In the Netherlands, the prosecutor at the International Criminal Court, Luis Moreno-Ocampo, confirming Seif al-Islam's arrest, said his office would talk to the rebels on Monday about his transfer for trial.

Seif al-Islam, his father and Libya's intelligence chief were indicted earlier this year for allegedly ordering, planning and participating in illegal attacks on civilians in the early days of the violent crackdown on anti-regime protesters.