Tripoli: US Defence Secretary Leon Panetta told Libya`s leaders on Saturday they faced a long, hard road in moving on from 42 years of one-man rule and uniting rival militias that still hold the streets in the oil-producing North African state.

Panetta, the first US defence chief ever to visit Libya, said Washington stood ready to help but offered no specific aid to a leadership struggling to stamp its authority two months after the capture and killing of Muammar Gaddafi.

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He warned of tough challenges ahead in uniting the armed groups that emerged from the war, in securing arms caches and building an army, police and democratic institutions.

"This will be a long and difficult transition, but I am confident that you will succeed," the defence secretary said at a news conference after meeting interim Prime Minister Abdurrahim El-Keib and Defence Minister Osama Al-Juwali.

The authority of Libya`s interim government is being challenged by militias who took Tripoli in August, six months after the start of a rebellion against Gaddafi that drew NATO into an air war.

Some withdrew after Gaddafi was killed in October, but others remain, heavily armed and holding out for a share of the power they say they are owed.

"I`m confident they (the interim leaders) are taking the right steps to reach out to all of these groups and bring them together so they will be part of one Libya and one defence system," Panetta said.

Clashes between militias and rival tribes since Gaddafi`s over thrown are threatening to spiral out of control in the absence of a fully-functioning government or national security force to unite the thinly populated desert country.

Late on Friday, senior military leader Khalifa Haftar said two of his sons had been wounded in separate gunfights with militias from the western town of Zintan which control Tripoli`s airport and other locations in the capital.

A week earlier, a convoy carrying Haftar, the commander of ground forces in the Libyan national army, clashed with militiamen at a checkpoint near the airport. Prime Minister Keib promised job programs and other "opportunities" to help coax the militias off the streets.

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"We know how serious this issue is, we know it`s not just a matter of saying `Okay, just put down your arms and go back to work,`" he told reporters, speaking in English.

"We have solid programs that are designed to attract all these young men and women."

Keib`s government won a welcome boost on Friday when the UN Security Council lifted sanctions on Libya`s central bank and a subsidiary, clearing the way for the release of tens of billions of dollars held overseas to ease an acute cash crisis.

The United States said it had unblocked more than $30 billion in Libyan government assets.

The Libyan leadership sorely needs the funds -- estimated to total around $150 billion -- to pay public sector workers, start the long process of rebuilding and to bolster its authority over the militias.

Panetta arrived from Turkey, having also visited Afghanistan and presided over the formal end to almost nine years of war in Iraq on Thursday.

The Tripoli leg lasted only hours, ending with Panetta paying respects at a Protestant cemetery overlooking Tripoli`s harbor and believed to hold the remains of 13 US soldiers killed in an ill-fated naval mission to combat piracy in 1804.

The graves bore small American flags and a floral wreath. The United States took part in the NATO bombing campaign against Gaddafi`s forces, but handed the initial lead role to alliance allies including France and Britain.

Panetta said the new leadership would need to secure the weaponry proliferating in the country and build professional security forces.

He said Washington was ready to help however it could, but said there had been no discussion of supplying arms or military equipment.

Bureau Report