Libya's opposition says it would accept a ceasefire if Colonel Muammar Gaddafi's forces withdraw from rebel-held cities.
The announcement was made by Mustafa Abdul Jalil, leader of the Transitional National Council, following talks with UN special envoy Abdul Ilah Khatib in Benghazi.
It comes two days after rebel fighters were driven out of several key oil terminals in eastern Libya that they had twice seized during the uprising.
Mr Jalil said the council would agree to a ceasefire if rebels in western Libya have "freedom of expression" and Col Gaddafi's forces leave major cities.
He also said the dictator would have to allow the protests to continue unhindered and the revolt still aimed to topple the regime.
Mr Jalil said: "We agree on a ceasefire on the condition that our brothers in the western cities have freedom of expression and that the forces besieging the cities withdraw."
Meanwhile, the US is preparing to pull its attack planes out of the coalition airstrikes in Libya - as rebel fighters are pushed back to the eastern town of Brega by the dictator's advancing troops.
US Defence Secretary Robert Gates and Joint Chiefs of Staff chairman Admiral Mike Mullen said American combat missions would end on Saturday, with Nato partners and other coalition nations picking up the slack.
Mr Gates said no-one should be surprised by the move, but he called the timing "unfortunate".
After coalition airstrikes began on March 19, the rebels raced forward to recapture the towns of Ajdabiyah, Brega and Ras Lanuf.
Mr Mullen said 25% of Libyan military hardware had been destroyed.
But instead of advancing towards Gaddafi's home town of Sirte and the capital Tripoli, the rag-tag rebel army was pushed back again and is now locked in battles to protect its ground from the dictator's more experienced troops.
Sky's security editor Sam Kiley reported opposition fighters have now taken up defensive positions near Brega following their dramatic reversal of fortune.
He said: "If Libya is going to be prevented from being divided or collapsing into a choatic form of civil war along the lines of Somalia then the rebels are going to have to move fast.
"That means the coalition are going to have to deal more damage to Gaddafi's military infrastructure.
"Failure to do that, in my view, will mean this will drag on an Libya will go through a very steady collapse."
Airstrikes have decreased considerably in the last three days, with officials saying that cloud cover and sandstorms have made it difficult to distinguish between Col Gaddafi's forces, rebels and civilians.
Mr Mullen and Mr Gates stressed that even though powerful combat aircraft like the side-firing AC-130 gunship and the A-10 Thunderbolt, used for close air support of friendly ground forces, will stop flying after Saturday, but will be put on standby.