A top US diplomat says Colonel Gaddafi is "delusional" and "unfit to lead" after the dictator denied there were anti-regime protests and claimed Libyans loved him.
As demonstrators close in on the capital Tripoli, he also rejected international calls for him to step down and dismissed the uprising which has ended his control over eastern Libya.
Col Gaddafi also denied using his air force to attack protesters but said planes had bombed military sites and ammunition depots.
And he claimed young people were given drugs by al Qaeda and that was why they were out on the streets.
Col Gaddafi's denials about protests were met with derision in Washington, with the US ambassador to the UN, Susan Rice, saying: "It sounds, just frankly, delusional".
She said the leader's behaviour, including laughing on camera in interviews amid the chaos, "underscores how unfit he is to lead and how disconnected he is from reality".
Susan Rice has called Colonel Gaddafi 'delusional'
Ms Rice admitted the US was reaching out to opposition groups in Libya.
But she added that until the various opposition factions become more organised, it was "premature" to discuss military assistance.
Speaking in broken English, the Libyan leader said: "No demonstrations at all in the streets! No, no one against us.
"Against me for what? Because I am not president. They love me, all my people with me, they love me all. They will die to protect me, my people."
Asked why his opponents had seized control of the second city of Benghazi and why they were against him, he replied: "It is al Qaeda, it is al Qaeda, it is al Qaeda, not my people."
When asked if he planned to flee Libya due to the uprising, he simply laughed off the idea.
"Who would leave his homeland? Why would I leave my homeland? Why do I leave Libya?" he said.
Meanwhile, a spokesman for Libya's Information Ministry has turned on David Cameron, blaming the prime minister for the unrest in the country and the wider region.
Khaled al Koabi claimed to have information that Britain is "planning to carry on some activities that can create an environment of instability in some Arab countries, for the sake of changing regimes".
Meanwhile, a British oil worker has told Sky News of his relief after being evacuated out of Libya by the RAF and special forces amid the unrest.
Gary Wooton said: "The best feeling was when he jumped on to the plane with the SAS lads. From then on, I felt safe."
The uprising that began February 15 has posed the most serious challenge to the rule of Col Gaddafi, who has been in power for more than four decades.
His bloody crackdown has left hundreds of people, and perhaps thousands, dead.
While anti-regime groups control the east of the country, the dictator is dug in in Tripoli and nearby cities.
He is backed by his elite security forces and militiamen who are generally better armed than the military.