Muammar Gaddafi's body was buried overnight in a secret location after several days on display in a market freezer, a local Libyan military council member said on Tuesday.

The source on Misrata council, speaking on condition of anonymity, said Gaddafi's remains were buried "overnight in a religious ceremony" along with the corpses of his son Mutassim and ex-defence minister Abu Bakr Yunis Jaber.

According to guards at the entrance to the market on the outskirts of Misrata, a convoy of four or five military vehicles took away the bodies late on Monday night to an unknown location.

Three religious leaders loyal to Libya's ousted leader prayed and performed a religious ceremony before the burial, the military council member told AFP.

The two sons of the former defence minister, brought straight from prison, and his father, were present to witness the bodies being picked up from the market, the source said.

"I saw the burial permit. It stated that Gaddafi had two gunshot wounds, one in the head and one in the chest, and that he bore the scars of previous surgical operations," the source added.

In Benghazi, a senior official of the National Transitional Council (NTC) said the burial "took some time" to organise due to a "disconnect between the local (Misrata) council and the NTC."

"But now he is buried," interim oil and finance minister Ali Tarhuni told reporters. "He was given a Muslim burial. He didn't deserve it but it was an NTC decision."

The overnight burials come amid raging controversy over the circumstances of Gaddafi's death after he was taken alive during the fall of his hometown Sirte last Thursday.

Libya's interim leader Mustafa Abdel Jalil said on Monday that a commission of inquiry was to probe the strongman's killing after foreign governments and rights group raised concerns.

"In response to international calls, we have started to put in place a commission tasked with investigating the circumstances of Muammar Gaddafi's death in the clash as he was being captured," Abdel Jalil said.

The UN human rights office welcomed this announcement.

Disquiet has grown internationally over how Gaddafi met his end after NTC fighters hauled him out of a culvert where he was hiding following NATO air strikes on the convoy in which he had been trying to flee his falling hometown.

Mobile phone videos show him still alive at that point.

The corpses of Gaddafi - with a bullet wound to the head - his son Mutassim, and decades-long confidant Yunis had laid in a meat market freezer on the outskirts of Misrata until Monday.

Since Friday, thousands of ordinary Libyans had viewed the bodies of the slain men, many taking pictures on their mobile phone.

Gaddafi's "cadaver has been kidnapped and exhibited as a war trophy, a conduct that violates the most elemental principles of Muslim norms and other religious beliefs," Cuban leader Fidel Castro wrote in an opinion column on Monday.