Seif al-Islam says Muammar Gaddafi 'willing to hold elections, step aside if lost'

The proposal - which follows a string of concessions offered by the Libyan leader that Western powers have dismissed as ploys - comes at a time when frustration is mounting in some NATO states at the progress of the military campaign.

Four months into Libya's conflict, rebel advances towards Tripoli are slow at best, while weeks of NATO air strikes pounding Gaddafi's compound and other targets have failed to end his 41-year-old rule over the oil-producing country.

A series of explosions was heard from Gaddafi's compound in Tripoli in the early hours of Thursday and plumes of smoke rose into the sky.

"They (elections) could be held within three months. At the maximum by the end of the year, and the guarantee of transparency could be the presence of international observers," Gaddafi's son Saif al-Islam told Italian newspaper Corriere della Sera.

He said his father, who came to power in the same year that man first set foot on the moon, would be ready to step aside if he lost the election but would not go into exile.

"I have no doubt that the overwhelming majority of Libyans stand with my father and sees the rebels as fanatical Islamist fundamentalists, terrorists stirred up from abroad," the newspaper quoted Saif al-Islam as saying.

The offer was made as Mikhail Margelov, the envoy leading Russia's efforts to end the conflict, arrived in Tripoli for talks wtih Gaddafi's government.

The Kremlin, which says Gaddafi should quit but opposes NATO's action in Libya, has said it is ready to help negotiate the Libyan leader's departure.

"Clearly the talks in Tripoli will not be easy," Russia's Interfax news agency quoted Margelov as saying before he left for Tripoli.

"In the Arab world there is a tradition of forgiveness and conciliation, and many formerly odious leaders of regimes in the region continue to live in their countries ... despite having been overthrown," he was quoted as saying.