Libya's warring sides are under intense international pressure to cede power to prime minister-designate Fayez al-Sarraj, whose arrival in the capital on Wednesday angered a rival Tripoli-based government.
But there are signs that allegiances are starting to shift in favour of Sarraj, a businessman from Tripoli who was a member of a committee that paved the way to national dialogue in Libya.
Ten western cities called on all Libyans Thursday to back the Government of National Accord (GNA) in a major blow to the unrecognised Tripoli authority which is refusing to give up power.
The announcement came in a statement on the official Facebook page of the Sabratha municipality near the border with Tunisia.
"The situation of the country is sad. Life is very expensive, there is no cash, and so we saw that it's time to support this government in order to start solving all of these issues," said Sabratha mayor Hussein al-Dawadi.
Oil-rich Libya was plunged into turmoil after the 2011 ouster and killing of longtime dictator Moamer Kadhafi.
Two rival governments have been vying for control since mid-2014 when the Libya Dawn militia alliance overran Tripoli, forcing the internationally recognised parliament to flee to the east.
The Tripoli government demanded that Sarraj leave or surrender following his arrival by sea this week with a naval escort, after the airspace was closed to prevent him flying into the capital.
But the UN-backed leader remains in Tripoli where he is slowly building a power base.
On Thursday he met with the head of Libya's Tripoli-based central bank and discussed measures to safeguard banks and tackle the country's "cash flow problem,", according to Sarraj's office.
Perhaps crucially, the unity government also now has the support of the main armed group in the city, Nawasi, signalling a split within the security forces once loyal to the Tripoli authorities.
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"This is the bandwagon effect that many were hoping for," said Mattia Toaldo, a policy fellow at the European Council on Foreign Relations.
The unity leaders and their backers "have managed to convince a great part of what used to be Libya Dawn to join the GNA," he said.
"Difficult times lie ahead. The immediate challenge is to end the cash crisis. For the moment though the GNA seems to have proved that it's the only realistic game in town."
Around 300 supporters of the unity government gathered in the centre of Tripoli on Thursday, waving banners and flags.
World powers are increasingly alarmed about the rise of the Islamic State jihadist group in Libya, located just 300 kilometres (185 miles) away from Europe.
IS has established a stronghold in Kadhafi's coastal hometown of Sirte and launched a wave of attacks, both against rival Libyan forces and across the border in Tunisia.
The country has also long been a stepping stone for migrants seeking to cross the Mediterranean, and in recent years traffickers have exploited the country's instability.
International leaders, eager to see the establishment of a credible Libyan partner in efforts to tackle the extremists and people-smugglers, have pleaded with Libya's warring sides to endorse the unity government.
EU member states on Thursday agreed to impose sanctions on three Libyans for obstructing the formation of Sarraj's government.
They are the speaker of Libya's internationally recognised parliament, Aguila Saleh, as well as the Tripoli-based prime minister Khalifa Ghweil and parliament chief Nuri Abu Sahmein.
The measures comprise "a ban on travelling in the European Union and a freeze on assets in the EU", a European source said.
French Foreign Minister Jean-Marc Ayrault on Friday urged the international community to prepare to help the unity government if asked, providing military support if necessary.
"The chaos which reigns there today aids the rapid development of terrorism. It is a direct threat to the region and to Europe," he said in comments to a French newspaper.