Tunisia on Sunday decided to recognise the rebel National Transitional Council as the legitimate representative of the Libyan people, the news agency TAP reported.
"The political decision has been taken," a government source confirmed to AFP, as the rebels in Libya pushed their advance and were said to be only 20 kilometres (12 miles) from the capital Tripoli.
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Since the outbreak of the conflict, Tunisia has observed a prudent neutrality towards the warring sides.
As Libya's neighbour, Tunisia has taken in hundreds of thousands of refugees fleeing the fighting.
Many Libyan representatives from both the regime of Moamer Kadhafi and the rebellion have transited Tunisia, where negotiations and informal discussions have been held, notably on the resort island of Djerba.