US recognizes Libyan rebel TNC as legitimate authority.

That means billions of dollars of Libyan assets frozen in US banks could be released to the rebels.

The decision was announced by US Secretary of State Hillary Clinton at a diplomatic meeting in Istanbul.

Western and Arab members of the Libya Contact Group are drawing up a plan to end hostilities, which will be presented to Col Muammar Gaddafi

.

"The United States views the Gaddafi regime as no longer having any legitimate authority in Libya," Mrs Clinton said.

"And so I am announcing today that, until an interim authority is in place, the United States will recognise the TNC Transitional National Council] as the legitimate governing authority for Libya, and we will deal with it on that basis."