Libyan leader Muammar Gaddafi is celebrating the 40th anniversary of the coup that brought him to power.

The national celebration started around midnight at the former US military base of Matega near Tripoli. Lights adorn buildings across the city, walls in the old town have been freshly whitewashed and rows of green Libyan flags flutter over its streets.

Colonel Gaddafi's guests include Palestinian President Mahmoud Abbas, Venezuelan President Hugo Chavez, his Dominican counterpart Leonel Fernandez, Serbian leader Boris Tadic and Philippine President Gloria Arroyo.

Jordanian King Abdullah II is also due in Libya accompanied by his half-brother, Prince Ali.

Libya has invited dozens of Western heads of state but European leaders are expected to stay away, including Italy's Silvio Berlusconi who visited Libya on Sunday to mark the first anniversary of a Libyan-Italian friendship agreement.

Libya's ties with the West have improved markedly but suffered last month when the North African country gave a hero's welcome to the man convicted of the Lockerbie bombing.

In recent years, Libya has cut support for armed revolutionary groups around the world and made peace with Washington by scrapping a programme to build nuclear weapons.

However at home, political parties remain banned and Colonel Gaddafi staunchly defends his system of grass roots government by town-hall committee, rejected by critics as a cloak for authoritarianism.