The fund, set up at a meeting of the International Contact Group on Libya in Rome on Thursday, is intended to provide an emergency lifeline to the rebels, whose provisional administration has no source of financing to replace receipts from oil exports that have come to a virtual halt.

It will initially receive international donations. Blocked assets -- estimated to be worth $60 billion (40 billion euros) in Europe and the United States -- are to be used at a later date.

Italian Foreign Minister Franco Frattini, whose government hosted the meeting, said $250 million was already available in immediate humanitarian aid.

Wealthy Gulf states Kuwait and Qatar have pledged to be major donors.

The funds made available are far less than the figure of up to $3 billion dollars that had been sought by the rebels, but their leader, Mahmud Jibril, said "it's a good start."

Jibril said the three-billion figure was in fact "a six-month budget."

French Foreign Minister Alain Juppe said the new fund -- to be managed alternately by France and Italy, the two European governments which have recognised the rebel administration -- could be up and running "within weeks."

He acknowledged that it would take longer to tap Libyan government assets frozen abroad under UN sanctions to secure a longer-term credit line sought by the rebels as unblocking the assets "poses legal problems."

The prospect of seeing funds it regards as its own being used to finance the rebellion against it infuriated Kadhafi's government.

"Libya still, according to the international law, is one sovereign state and any use of the frozen assets, it's like piracy on the high seas," Deputy Foreign Minister Khaled Kaim told a Tripoli news conference.

Kaim said there would no let-up in the government's attempts to block off the maritime lifeline to the besieged city of Misrata -- the rebels' last bastion in the west.

"We will not allow those ships to bring arms to the city and then to evacuate some criminals," he said, after an International Organisation for Migration ship on Wednesday offloaded supplies and onloaded refugees at the city's port under shelling by Kadhafi forces.

Human rights watchdog Amnesty International said the government's two-month siege of Misrata -- Libya's third largest city -- might amount to a war crime.

"The scale of the relentless attacks that we have seen by Kadhafi forces to intimidate the residents of Misrata for more than two months is truly horrifying," said Amnesty senior adviser Donatella Rovera.

"It shows a total disregard for the lives of ordinary people and is in clear breach of international humanitarian law."

At the Rome meeting, the rebel leader outlined a political plan that would be enacted if Kadhafi leaves power in which an interim government would hold a referendum on a new constitution and parliamentary and presidential elections within eight months.

Jibril said the rebels would soon contact the United Nations to organise municipal elections in the cities it already controls as a way of showing its commitment to democratic change in Libya.

France announced it ordered 14 people who served as Libyan diplomats under Kadhafi's regime to leave the country within two days.

"France has declared persona non grata 14 Libyan ex-diplomats posted in France," the foreign ministry said, indicating Paris no longer recognised their diplomatic status.

The ministry accused them of "activities incompatible with the relevant UN resolutions... and contrary to the protection of Libyan civilians."

At the Rome meeting, US Secretary of State Hillary Clinton had called on the international community must do more to isolate Kadhafi's regime by expelling all diplomats loyal to him.

Britain ordered two Libyan envoys to leave London on Thursday. It had already expelled the ambassador.

In Moscow, the Russian foreign minister spoke out against developments in the way the international community is handling the Libyan crisis, while his visiting Chinese counterpart called for respecting Libyan sovereignty.

"As far as the Contact Group is concerned, this is a self-forming group that is increasingly trying take the lead in setting global policy on Libya," Russia's Sergei Lavrov said during talks with his Chinese counterpart Yang Jiechi.

China's Yang Jiechi said, "We must respect the sovereignty and unity of the Libyan nation."

Both Russia and China abstained from the UN Security Council vote that authorised military action against the Kadhafi regime, in a move that allowed the measure to pass.

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