“Sebha is Gaddafi’s ancestral home, the place he was brought up and where the people will always be loyal to him,” said one. “If he is there, then there will be a bloodbath because his allies will fight to the last man to defend him. The Gaddafi regime has already pledged to fight to the last bullet to stay in power.”

Reports from cities across Libya throughout the day suggested that a late-night speech on Sunday by Col. Gaddafi’s son, Saif al-Islam, threatening that the regime would “fight to the last bullet” had backfired badly.

Protesters flooded on to the streets of the capital Tripoli, which had previously been less badly affected by riots. Many were reported to have then been shot dead by security forces.

By Monday morning, the Hall of the People, symbol of the republic, and other buildings in the city were in flames, leading to Col. Gaddafi’s decision to use even greater force on his people.

On Monday night, unconfirmed reports were emerging of mass and indiscriminate shootings, including of women and children unrelated to the protests, in a number of districts of Tripoli.

World leaders called for an end to the violence. European Union foreign ministers, meeting in Brussels, denounced “the ongoing repression against demonstrators in Libya and deplores the violence and death of civilians.”

David Cameron, the prime minister, who during the day became the first world leader to visit Egypt since the fall of President Hosni Mubarak ten days ago, called events in Libya “quite appalling”.

He has also asked his officials to investigate whether any British-made weapons have been used in the “vicious repression”.

The government faces an embarrassing fallout from what officials now expect to be the end of Col. Gaddafi’s regime.

He also faced Labour criticism after it emerged he is being accompanied on his Middle East tour by executives from major British companies, including several defence manufacturers.

Mr Cameron last night flew on to Kuwait, where he will today deliver a speech making a “liberal conservative” call for widespread political reform in the region.

Since democracy often goes hand-in-hand with open markets, more freedom in the Middle East could deliver commercial opportunities for Britain, the Prime Minister will argue today.

Discussing the thinking behind the speech, Mr Cameron insisted that more democracy in the Middle East is in Britain’s best interests.

“We’ve got a very important trading relationship that we want to expand and we’ve got a very important security relationship, not least in terms of combating extremist terror, that we need to sharpen,” he said.

“A process of political and economic reform doesn’t run counter to those other two objectives. It goes with those objectives.”

In his speech on Tuesday, Mr Cameron will also tacitly criticise the support Western governments have previously shown for Middle Eastern strongmen like Mr Mubarak, toppled this month after more than 30-years of autocratic rule.

Mr Cameron will insist that Britain is not interested in trying to appoint particular leaders or parties to govern Middle Eastern states.

Instead, he will argue that the people of the Middle East should be given the fullest possible choice of politicians and parties.

Mr Cameron’s officials said he is intent on making sure that popular uprisings in the Middle East do not ultimately enhance the power of either Iran or Islamist political movements like Egypt’s Muslim Brotherhood.

The government faces an embarrassing fallout from what officials now expect to be the end of Col. Gaddafi’s regime.

Col. Gaddafi was once Britain’s number one public enemy, following the shooting of Pc Yvonne Fletcher outside the Libyan embassy in 1984, his known support for the IRA with money, weapons and Semtex, and the bombing of Pan-Am 103 over the Scottish town of Lockerbie.

But the British government under first Tony Blair and then Gordon Brown in the late 1990s oversaw Col. Gaddafi’s emergence as an almost respectable figure on the world stage.

While the United States supported the lifting of sanctions following the regime’s agreement to give up weapons of mass destruction, it was London which led attempts to open up Libya’s oil industry to outside investment.

Discussions culminating in a decision in August 2009 by the Scottish executive, supposedly on humanitarian grounds, to release the only man convicted of the Lockerbie bombing from prison, led to a furious and public row between London and Washington.

On Monday night, BP said it was suspending operations in the country, four years after it returned there for the first time in three decades. It said it was attempting to organise the evacuation of 40 British employees and their families, mostly from Tripoli.

The Foreign Office said it was trying to help other Britons escape the violence.

Events in the Middle East, where Col. Gaddafi looks set to become the third leader to fall in six weeks after Mr Mubarak and President Zine al-Abedine Ben Ali, have sent shock waves through world markets.

Oil prices rose on Monday, particularly after analysts began speculating that unrest could even spread to Saudi Arabia, which faces its own planned “Day of Rage” on March 11. The price of Brent crude oil hit $105.3 (£64.8) a barrel.

Across the world, Col. Gaddafi’s operatives defected. The Libyan mission to the United Nations said it no longer represented the regime, only the people. Its deputy ambassador, Ibrahim Omar al-Dabashi, described his leader’s actions as “genocide” and pleaded with the international community to intervene, to stop reinforcements arriving and to send relief supplies.

Two colonels in the air force flew their jets to Malta, saying they had refused orders to fire on protesters in Benghazi and that they were seeking asylum.

Meanwhile, as opposition movements continued to spring into life from Morocco on the Atlantic to once-secure Gulf monarchies, the kingdom of Bahrain, where the army fired on protesters last week, announced it was cancelling next month’s Grand Prix, the first of the season.

**Richard Spencer, Middle East Correspondent, James Kirkup in Kuwait City and Nabila Ramdani in Cairo