Benghazi: Libya's new leaders on Sunday declared the country "liberated", three days after ousted despot Muammar Gaddafi was captured and killed, paving the way for the formation of an interim government.

The long-awaited declaration came amid raging controversy over the circumstances of Gaddafi's death after he was taken alive during the fall of his hometown Sirte. Britain said the incident had "stained" the National Transitional Council (NTC).

"Declaration of Liberation. Raise your head high. You are a free Libyan," NTC Vice Chairman Abdel Hafiz Ghoga told a massive rally in the eastern city of Benghazi, where the uprising against Gaddafi was launched eight months ago.

Tens of thousands of voices echoed him chanting, "You are a free Libyan."

In reaction to the announcement in Benghazi, US President Barrack Obama swiftly hailed Libya's "era of promise" and urged national reconciliation.

Benghazi's Kish Square was awash with the green, red and black flags of the revolution that toppled Gaddafi, while the formal declaration raised a deafening roar that reverberated
across the Mediterranean city.

Interim leader Mustafa Abdel Jalil, in his address, urged Libyans to abide by the law and respect property, reiterating that Islamic Sharia Law would be the main source of the north
African nation's legislation.

Abdel Jalil also gave thanks to NATO and regional allies for their roles in toppling Gaddafi, and paid special tribute to all those who lost their lives in the battle for Libya's freedom.