Leon was speaking in neighbouring Algeria, as he pressed ahead with talks aimed at ending the violence that has plagued Libya since the 2011 NATO-backed uprising that ousted and killed dictator Moamer Kadhafi.
"There are two options: a political accord or destruction," Leon said at the start of talks in Algiers, adding that "destruction is not an option".
At the weekend in Morocco, he brokered the first direct talks between Libya's rival parliaments, and their envoys are due to return to Rabat on Wednesday for further talks.
Meanwhile, Leon has brought together around 15 key figures for the meeting in Algiers, which he described as a "forum of political parties" crucial to taking Libya towards a political settlement.
Saying "we expect a lot from this meeting", Leon insisted that "no party in Libya is going to be allowed to impose itself on another one.
"The solution lies in dialogue; it is up to you to find an agreement."
For his part, Algerian Deputy Foreign Minister Abdelkader Messahel called for Libyans to be "patient," with a view to reaching a "national consensus".
Algeria's regime, which supported Kadhafi to the very end and opposed the international intervention that led to his downfall, is pressing for a political solution.
Libya's elected, internationally recognised parliament and government are based in the east, while the rival Islamist-backed General National Congress and a government it supports are in the capital, Tripoli.
- 'Grasp this last chance' -
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On Monday, EU foreign affairs chief Federica Mogherini said the sides must reach a deal on forming a unity government within days, not weeks.
"We need the Libyan factions to take the first step," she told the UN Security Council.
Libyan leaders must "grasp this last chance and agree on a transitional national unity government", she added.
"This should happen within days, not weeks, as time does not work on our side."
Mogherini raised concerns about the Islamic State group's expanding presence in Libya, where its local affiliate has beheaded 21 Coptic, mostly Egyptian, Christians.
That prompted retaliatory air strikes by Egypt and requests for a UN embargo on arms sales to Libya to be lifted in favour of the internationally recognised government.
And on Friday, IS jihadists killed eight guards in an attack on the southern oilfield of Al-Ghani.
Nine foreigners, including a 39-year-old Austrian and a Filipino who worked for a services company, were missing after the attack.
Austria's foreign ministry said on Monday there was "reliable information" that they were "in the hands of IS terrorists".
The Security Council put the arms request on hold on Monday, to allow Leon to make progress in brokering a deal on a national unity government that could spearhead the battle against IS.
There is also concern that arms shipments to Libya could fall into the wrong hands.
A UN panel of experts wrote to the Security Council warning of possible "transfers of materiel -- particularly tanks, small arms, light weapons and related ammunition -- to non-state actors directly by the official end-users to militias supporting them or indirectly following fighting and loss of control over stockpiles."