Libyan leader Col Muammar Gaddafi has refused to stand down amid widespread anti-government protests which he said had tarnished the image of the country.
In his first major speech since unrest began last week, Col Gaddafi said the whole world looked up to Libya and that protests were "serving the devil".
He urged his supporters to go out and attack the "cockroaches" demonstrating against his rule.
Rights groups say nearly 300 have been killed in the violence so far.
A defiant and angry Col Gaddafi said that he had brought glory to Libya. As he had no official position from which to resign, he would remain the head of the revolution, he said.
He blamed the unrest on "cowards and traitors" who were seeking to portray Libya as a place of chaos and to "humiliate" Libyans. At other points he referred to the protesters as rats and mercenaries.
During the speech there were reports of gunfire on the streets of the capital, Tripoli. In Benghazi, the second largest city, people watching the address reportedly threw shoes at screens as a sign of their anger.
US Secretary of State Hillary Clinton later described the violence as "completely unacceptable".
After an emergency session on Tuesday, the UN Security Council condemned the crackdown on protesters and called for an "immediate end" to the violence.
Civil war threat
State TV had said Col Gaddafi was going to announce "major reforms" in his speech, but the only such reference was to some devolution of power to local authorities.
In his angry and rambling speech, Col Gaddafi said the protesters represented less than 1% of Libya's population.
They had been given drink and drugs, he said, urging people to arrest them and hand them over to the security forces.
He called on "those who love Muammar Gaddafi" to come out on to the streets, telling them not to be afraid of the "gangs".
"Come out of your homes, attack them in their dens. Withdraw your children from the streets. They are drugging your children, they are making your children drunk and sending them to hell," he said.
He would "cleanse Libya house by house", he said.
"If matters require, we will use force, according to international law and the Libyan constitution," he said, and warned that the country could descend into civil war or be occupied by the US if protests continued.
Anyone who played games with the country's unity would be executed, he said, citing the Chinese authorities' crushing of the student protests in Tiananmen Square as an example of national unity being "worth more than a small number of protesters".
He also railed against western countries, in particular the United States and Britain, which he accused of trying to destabilise Libya.
It was unclear whether the speech, which lasted about an hour, was live or pre-recorded.
But it was apparently filmed at his Bab al-Azizia barracks in Tripoli, which still shows damage from a US bombing in 1986. The cameras occasionally cut away to show a statue of a giant fist crushing a US war plane.
The BBC's Frank Gardner said Col Gaddafi appears to be completely divorced from reality, as if he has been living inside a bubble for the 40 years of his rule.
The Libyan leader said he had not authorised the army to use force, despite opposition statements that more than 500 people have been killed and more than 1,000 are missing - an indication that he was either not aware of the deaths or was deluded, says our correspondent.
The Libyan authorities have reacted fiercely to the outbreak of protests in the country, which have come amid anti-government unrest in many other countries in the region.
Foreign journalists work under tight restriction in Libya, and much of the information coming from the country is impossible to verify.
But witnesses say foreign mercenaries have been attacking civilians in the streets and that fighter planes have been shooting down protesters.
The BBC's Jon Leyne, in eastern Libya, said the region appears to be wholly under opposition control and people are deliriously happy.
Many of the army and police have defected and have been accepted by the opposition.
Local people said the government there had collapsed on Thursday after the first protests. They believe the only people now supporting Col Gaddafi are foreign fighters in the country.
Our correspondent says there is now little doubt that Col Gaddafi's rule is finished, but the only question of how long it takes and how bloody the end will be.
Many Libyan diplomats, including the country's ambassador to the US, have turned their backs on Col Gaddafi and are urging the international community to take action. They have urged the UN to impose a no-fly zone over the country in protest.
Interior Minister Abdel Fattah Younes al-Abidi is reported to have resigned on Tuesday evening, and to urged the army to "join and heed the people's demands". Justice Minister Mustapha Abdeljalil reportedly resigned on Monday.
In other developments:
- Tens of thousands of foreigners are trying to leave the country
- China has urged Libya to ensure the safety of its citizens after hundreds of Chinese construction workers reportedly fled armed looters
- Three Turkish ships have been sent to Benghazi to evacuate about 3,000 nationals. A thousand have already been airlifted to safety
- Italy is to send three C-130 air force planes to evacuate some 1,500 of its citizens in Libya
- The US has ordered all non-emergency personnel to leave Libya
- The UK foreign office is advising Britons to leave if they can, although most of the 3,500 resident in Libya are thought to have already left
- Oil company Royal Dutch Shell says all its expatriate staff have been "temporarily relocated". Italy's Eni and France's Total are also evacuating staff while Spain's Repsol is suspending operations and sending its expatriate staff home
- The Arab League said it has suspended Libya's participation until it responded to the people's demands.
Human Rights Watch says at least 62 bodies had been taken to hospital morgues in Tripoli since Sunday, in addition to the 233 people it said had been killed outside the capital previously. Opposition groups put the number of dead at at least 500.
The violence has helped to push up oil prices to their highest levels since the global financial crisis of 2008.