Libya denounced charges it was massacring protesters as lies Tuesday as Muammar Gaddafi broke cover over the challenge to his four-decade rule after a raft of diplomatic and military defections.

With the Middle East turmoil pushing oil prices ever higher, rulers of the Gulf state of Bahrain were confronted by fresh mass protests and governments made plans to evacuate citizens from hotspots across the Arab world.

Both the UN Security Council and Arab League were to meet to discuss the bloody crackdown by Libyan authorities that prompted the UN's rights chief to warn that crimes against humanity may have been committed.

Even Libya's deputy ambassador accused Gaddafi of "genocide," saying he should stand trial for war crimes, while the Organisation of the Islamic Conference denounced the "excessive" use of force to quash the uprising.

Witnesses in the Libyan capital Tripoli had reported "massacres" in certain neighbourhoods after the state channel announced on Monday that security forces were assaulting "dens of terrorists."

Gaddafi, 68, appeared on Libya television late Monday night to scotch "malicious rumours" that he had abandoned the oil-rich North African nation in the face of protests that flared a week ago in the east of the country.

"I am going to meet with the youth in Green Square" in downtown Tripoli, said Gaddafi in what state television called a live broadcast from outside the strongman's home, which lasted just 22 seconds.

"It's just to prove that I am in Tripoli and not in Venezuela and to deny television reports, those dogs," he said as he stood under a silver umbrella while about to step into a car.

Although government restrictions have complicated the task of compiling a tally, Human Rights Watch said 233 had been killed in the uprising while the International Federation for Human Rights put the toll at between 300 and 400.

There have been widespread reports by witnesses that the air force has been strafing protestors but the state-run Al-Jamahiriya Two television network rejected all such accusations.

"They say there are massacres in several cities, towns and neighbourhoods of Libya. We must fight against these rumours and lies which are part of psychological warfare," said a red ticker on the bottom of television screens.

This information "aims to destroy your morale, your stability and your riches," it added.

But despite the shows of defiance, Gaddafi's grip on Libya appeared increasingly shaky as loyalists quit and fighter pilots defected, flying to Malta where they said they had refused to follow orders to fire on protesters.

After flaring up in the east last week, the uprising spread to the capital on Monday, where protesters attacked police stations and the offices of the state broadcaster and set government buildings ablaze.

Libya is wedged between Egypt and Tunisia, two countries whose long-time leaders have been forced out by popular revolts since last month.

Residents of two districts in Tripoli said by telephone there had been "a massacre," with gunmen "firing indiscriminately" in Tajura district.

Another in Fashlum said helicopters had landed what he called African mercenaries who opened fire on anyone in the street, killing many people.

A Latin American expatriate living in Tripoli's upscale Gargaresh suburb reported seeing several burnt tyres and a torched truck and car during a brief outing on Monday.

"We passed a barricade manned by men armed with Kalashnikovs," he said, adding: "I was very scared, they had arrested a couple of Africans."

Terrified expatriates were hunkered down with their families awaiting evacuation from Libya, and said pictures of Kadhafi had been torn in Gargaresh, "which earlier was full of his supporters."

More than 1,000 Chinese construction workers in Libya were forced to flee after gun-wielding robbers stormed their compound, stealing computers and luggage, their employer and state media in Beijing said.

A Portuguese military plane evacuated 114 foreigners overnight from Libya to a NATO base in Italy, the Lusa news agency reported.

The turmoil in Libya, Africa's fourth largest oil producer, sent oil prices soaring. In early morning trade, Brent North Sea crude for delivery in April surged to $108.57 per barrel, hitting the highest level since September 2008.

While there has been no popular uprising in the Middle East's number one producer, Saudi Arabia, the regime in neighbouring Bahrain has been facing grow clamour for widespread reforms.

The Shia-led opposition announced a demonstration on Tuesday afternoon in Manama, the first to be officially called by political associations since protests started last week in response to calls by cyber activists.

Thousands of Bahrainis earlier joined the funeral of a slain Shia protester as King Hamad ordered political prisoners freed in a new bid to end a standoff with anti-regime demonstrators.

Mourners chanted anti-regime slogans as the funeral procession wound through Manama. Vast crowds converged on Pearl Square to demand the fall of the regime despite the king accepting the release of political prisoners, a key demand.