Libya's Muammar Gaddafi is willing to hold elections and step aside if he loses, according to his son Saif al-Islam.
The offer was dismissed by rebels, but could test the unity of the Western alliance trying to force him out.
However, Prime Minister Al-Baghdadi Ali Al-Mahmoudi later appeared to question the potential concession, telling reporters: 'I would like to correct (that) and say that the leader of the revolution is not concerned by any referendum.'
He added that there was no reason for the Libyan leader to step down in any case because he had not held any political or administrative role since 1977.
Saif al-Islam told Italian newspaper Corriere della Sera: 'They (elections) could be held within three months. At the maximum by the end of the year, and the guarantee of transparency could be the presence of international observers.'
He said his father would be ready to step aside if he lost the election, though he would not go into exile.
The proposal follows a series of concessions offered by the Libyan leader that Western powers have dismissed as ploys.
It comes at a time when frustration is mounting in some NATO states at the progress of the military campaign.
Four months into Libya's conflict, rebel advances towards Tripoli are slow at best. Weeks of NATO air strikes pounding Gaddafi's compound and other targets have failed to end his 41-year-old rule over the oil-producing country.
The rebel leadership in the eastern stronghold of Benghazi dismissed the election offer, saying it was 'wasting our time'.
'Saif al-Islam is not in a position to offer elections. Libya will have free elections and democracy but the Gaddafi family has no role to play in this process,' Jalal el-Gallal, a rebel spokesman, told Reuters.
'These people are criminals, they have utter disregard for human life. They are wasting our time. They have to withdraw troops from our cities, allow humanitarian aid to reach people, they will face justice for their crimes. And only then we can talk about holding elections.'
An envoy leading Russian efforts to find a solution to the conflict said after talks with senior Libyan officials in Tripoli that Gaddafi's administration was not prepared to contemplate his departure.
But the envoy, Mikhail Margelov, said his task was to soften that position through negotiation.
'I can say that today I am a cautious(ly) optimist regarding the resolution of the Libyan crisis,' Russia's Interfax news agency quoted Mr Margelov as saying.
Earlier, a series of loud explosions were heard in the Libyan capital Tripoli, with smoke seen rising above the fortified compound of Muammar Gaddafi.
The compound has been the target of repeated NATO air strikes in recent weeks.
Meanwhile, US Secretary of State Hillary Clinton has accused Gaddafi's forces of using rape and violence against women as 'tools of war.'
