A pro-Islamist figure, Omar al-Hassi, on Tuesday presented a cabinet line-up to the outgoing General National Congress, which quickly recognised the list rivalling Libya's internationally recognised government.
The interim GNC "approved Mr Hassi's government", assembly spokesman Omar Ahmidan said, without specifying if the line-up had yet been formally submitted for approval.
Hassi's cabinet list is made up of 19 personalities little-known to Libya's wider public, the official Lana news agency said.
Hassi, a political science lecturer at the University of Benghazi in eastern Libya, was the losing candidate in a GNC election in June for a new premier and parliament.
On August 25 he was tapped by the GNC to form a "salvation government" in opposition to the body now sitting in the eastern city of Tobruk.
Ahmed Miitig was elected instead, but the supreme court ruled this unconstitutional and Abdullah al-Thani remained interim premier.
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Thani now heads a toothless outgoing government that admitted on Monday from its safe refuge in Tobruk that control of Tripoli has in effect been lost to militias.
Libya had been sliding steadily into chaos since Moamer Kadhafi was overthrown and killed in October 2011.
The government in Tobruk announced last week it had tendered its resignation to parliament, which on Monday voted to ask Thani to form a streamlined new cabinet.
The parallel administration in Tripoli was born after mostly Islamist militiamen on August 22 seized the capital's international airport from nationalist rivals.
After their victory, the GNC -- whose mandate had officially expired with the election of a new government -- tasked Hassi with forming a parallel administration.
Interim authorities had been steadily losing ground to the militias and the Fajr Libya (Libya Dawn) mainly Islamist alliance, which seized Tripoli airport after weeks of fighting.
Fajr Libya rejects the legitimacy of the elected parliament because it allegedly supported air raids last month -- which US officials said were carried out by the United Arab Emirates -- against its fighters in the airport area.
The central bank of the troubled but oil-rich North African nation, meanwhile, appealed on Tuesday for it to be kept out of the political chaos, warning in a statement that the international community could otherwise "freeze the assets of the Libyan government".