A team of African leaders arrived in the Libyan rebel stronghold of Benghazi on Monday to try to sell a peace plan already accepted by Muammer Gaddafi's regime.

But the rebels were demanding that any ceasefire should require the withdrawal of government troops from the streets and freedom of expression.

Italian Foreign Minister Franco Frattini said Gaddafi and his sons should play no role in Libyan politics when a resolution is found to the current conflict.

In Ajbadiya, rebels buried the bodies of the last of at least 35 Gaddafi loyalists as they consolidated their hold on the key crossroads town, recaptured in fierce fighting at the weekend.

As the African Union delegation arrived, rebels said any ceasefire was dependent on the withdrawal of government troops from the streets and freedom of expression.

Around 200 people waving rebel flags were gathered outside the airport when the high-level African Union delegation arrived, welcoming its efforts but demanding Gaddafi's overthrow.

"The people must be allowed to go into the streets to express their opinion and the soldiers must return to their barracks," Shamsiddin Abdulmolah, a spokesman for the rebels' Transitional National Council, told AFP.

"If people are free to come out and demonstrate in Tripoli, then that's it. I imagine all of Libya will be liberated within moments."

He also demanded the release of hundreds of people who have gone missing since the outbreak of the popular uprising and are believed to be held by Gaddafi's forces.

South African President Jacob Zuma said Tripoli had accepted the African Union's plan for a ceasefire which would halt a NATO bombing campaign that destroyed 26 loyalist tanks on Sunday alone.

"We also in this communique are making a call on NATO to cease the bombings to allow and to give a ceasefire a chance," Zuma stressed.

But the rebels doubt the Libyan strongman would adhere to such a deal.

"The world has seen these offers of ceasefires before and within 15 minutes (Gaddafi) starts shooting again," Abdulmolah said.

The rebels have said they would negotiate a political transition to democracy with certain senior regime figures but only on the condition that Gaddafi and his sons leave the country.

The South African leader is taking no further part in the talks as he was leaving Libya to return home due to prior commitments.

The other members of the AU team - the leaders of Mali, Amadou Toumani Toure, Mauritania, Mohamed Ould Abdel Aziz, and Congo's Denis Sassou Nguesso, as well as Ugandan Foreign Minister Henry Oryem Okello, representing President Yoweri Museveni - all arrived in Benghazi, 1,000 kilometres (600 miles) east of Tripoli.

Frattini told French radio station Europe 1 that France and Britain, which led calls for military intervention in Libya, agreed with Italy on the need for the de facto ruling family to step aside to end the crisis.

Asked whether Gaddafi or a relative could continue in some capacity in an interim government under the tentative peace process, Frattini said: "No, I don't accept that, and I don't think France or Britain would either.

"The sons and Gaddafi's family can't be part of future Libyan politics," he said.

"I think he has to withdraw. It's a precondition for us to begin afresh with Libyan national reconciliation."

In Ajdabiya, an AFP correspondent saw more than a dozen burnt-out pick-up trucks which the pro-Gaddafi fighters had fitted with heavy machine guns for their abortive offensive on the front line between the rebel-held east and the mainly government-held west.

Many of the bodies that the rebel fighters laid to rest close to the battlefield on the town's western outskirts were charred beyond recognition after a NATO strike, combined with their own efforts to repulse the loyalist assault.

"We found 35 bodies in total, maybe two or three more melted into the vehicles," said Muftah Jadallah, 63, as the last of the burials took place.

Attacks by government forces on the third city of Misrata, the rebels' last major stronghold in the west, have endangered civilians and targeted a medical clinic in violation of international law, Human Rights Watch said on Monday.

"We’ve heard disturbing accounts of shelling and shooting at a clinic and in populated areas, killing civilians where no battle was raging," said Sarah Leah Whitson, Middle East and North Africa director at Human Rights Watch.

According to Dr. Muhammad el-Fortia, from Misrata Hospital, they have recorded 257 people killed and 949 wounded since February 19.

The wounded include 22 women and eight children, he said.

A second doctor confirmed the figure in the region of 250 dead over the past month, most of them civilians, and said: "The fighters know how to protect themselves, but the civilians are getting hurt."