The United Nations leadership received backing from the UN Security Council last month to to send a 235-strong guard force because of the mounting threat of attack on the UN mission in Tripoli.
The government at first agreed the plan and then objected to it as outside interference, officials said on Monday. Libya has been unsettled since the fall of longtime dictator Moamer Kadhafi in late 2011.
"It doesn't look possible that the proposal can now go ahead," Britain's UN ambassador Mark Lyall Grant told reporters, adding that the UN secretariat was having a rethink.
There are about 200 staff in the UN mission in Libya (UNSMIL) "and at the moment they don't have a great deal of security and that is something the council takes very seriously and we are waiting for a further proposal," Lyall Grant told reporters.
Britain has taken a leading role in Libyan affairs on the 15-member Security Council which agreed a statement on Monday expressing "grave concern" over the worsening security and political divisions in the country.
The statement said recent turmoil threatens to "undermine the transition to democracy" in Libya where there has been serious unrest in the key western city of Benghazi while protesters have blocked oil terminals in the east of the country.
The Security Council strongly condemned the killing of protesters in Tripoli on November 15 and stressed "the urgent need to strengthen military and police institutions" to cope with unrest.
The council also condemned torture in "illegal" militia detention centres where thousands of people are said to have been held since Kadhafi's downfall.


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