UN special envoy Bernardino Leon held a first round of talks with rival politicians on September 29 that the council described as "an important step" toward a peaceful resolution in Libya.
But the Fajr Libya (Libya Dawn) militia that controls Tripoli has rejected the talks and declared in a statement that it was continuing its military operations.
In the east, the "Shura of Benghazi Revolutionaries" comprising jihadist groups, among others, issued their own statement rejecting the initiative as "unfair".
In a unanimous statement, the 15 members of the council "expressed their readiness to use targeted sanctions, including asset freezes and travel bans, against individuals or entities that threatened Libya's peace and stability or undermined its political transition."
Another round of talks is scheduled after the Eid al-Adha holiday, which ends Sunday evening.
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The talks held in the remote town of Ghadames brought together representatives of rival parliaments, with a view to restoring the full legitimacy of the internationally-recognized parliament which has been meeting in the town of Tobruk after Islamist militias seized control of Tripoli.
The Islamists and their allies have established a rival government in Tripoli headed by Omar al-Hassi and have convened a rival legislature which they dominate.
Government representatives from Britain and Malta, Libya's close Mediterranean neighbor, attended the closed-door meeting in Ghadames.
Libya has been in turmoil since longtime dictator Moamer Kadhafi was ousted in 2011.
A myriad of former rebel militias some of which helped topple Kadhafi have been fighting each other for power.