At least 28 people were killed and 60 were wounded when demonstrators attacked the headquarters in Benghazi of former rebels who had fought to oust Libyan dictator Moamer Kadhafi, a hospital official said.
"We have so far identified 28 people dead and some 60 injured," a doctor at the Al-Jala hospital in the eastern city told AFP, more than doubling an earlier toll.
Fighting erupted after dozens of demonstrators, some of them armed, tried to dislodge the powerful "Shield of Libya" brigade from its barracks in Benghazi, said an AFP correspondent at the scene.
They encircled the headquarters and called on regular security forces to step in.
Libya's post-Kadhafi authorities, who have still not managed to form a professional new army and police corps, often call on the "Shield of Libya" to intervene in the various tribal conflicts that trouble the country.
Adel Tarhuni, spokesman for the Shield of Libya group, said one member of the brigade had died and another seven were wounded.
Tarhuni also defended the "legitimacy" of the brigade, saying it officially came under the umbrella of the defence ministry.
He reported that a peaceful demonstration in front of the brigade's headquarters had been infiltrated by armed aggressors.
The gunmen then opened fire on the Shield of Libya building and threw improvised explosives, Tarhuni told television station Libya Al-Ahrar.
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Armed forces spokesman Colonel Ali al-Shikhi told Lana the brigade was "a reserve force of the Libyan army", and that an attack on them was equivalent to an "attack on the legitimate authorities".
Shikhi said the incident was "very serious", and called on restraint from all parties.
Overnight Saturday, Prime Minister Ali Zeidan said that the Shield of Libya members had left their headquarters and that the regular army had taken over the location and had taken charge of the heavy weaponry it found there.
Speaking on national television, Zeidan announced the opening of an enquiry into the incident, calling for calm on all sides.
The new authorities in Libya have failed to disarm and dissolve the former rebel groups, while seeking to legitimise some despite wide opposition in the general population.
Benghazi, the birthplace of the 2011 Libyan revolution, has seen several bombings and attacks against security services and Western diplomatic missions in recent months, highlighting the inability of the authorities to establish effective security in the country.
The attacks have been blamed on radical Islamists, like the one last September 11 against the US consulate that killed four Americans, including ambassador Chris Stevens.
The following month, people in Benghazi managed to force other militias from their bases.
NATO is sending a team to Libya to look at the possibility of training its military, alliance head Anders Fogh Rasmussen said Tuesday, some two years after NATO helped the rebels oust Kadhafi.
The team will be sent as soon as possible and return by the end of June when the next step will be determined, Rasmussen said.