Britain has granted diplomatic recognition to Libya's opposition ruling council while the group's leadership withdrew an offer for leader Moammar Gadhafi to stay in the country if he ceded power.

British Foreign Secretary William Hague Wednesday said his government also expelled all of Libya's diplomats and invited the rebel Transitional National Council to replace them. He said the moves are based on the opposition's increasing legitimacy, competency and success in reaching out to Libyans across the country.

Hague said the council is working toward a more open and democratic Libya, which he said is in “stark contrast” to Mr. Gadhafi, whose “brutality” against the Libyan people has stripped him of legitimacy.

The foreign secretary also said Britain will release $149 million in frozen Libyan assets to pay for fuel and basic needs in rebel-held territory.

The Libyan government condemned the moves, calling Britain's expulsion of its diplomats and recognition of the rebel council “illegal and irresponsible.”

Earlier Wednesday, the head of the opposition council, Mustafa Abdel Jalil, said the rebel group's offer for Mr. Gadhafi to step down and remain in the country has expired. Jalil said the proposal, which was presented to a U.N. envoy about a month ago, had a deadline attached.

On Tuesday, Libya's Prime Minister Al-Baghdadi al-Mahmoudi said Mr. Gadhafi's departure is not up for discussion. He commented after talks with U.N. special envoy Abdul Elah al-Khatib, who met with the Libyan opposition on Monday in Benghazi.

The United States, France and more than 30 other countries have recognized the council as Libya's interim government.

Britain's announcement came a day after Libyan TV showed the man convicted of the 1988 bombing over Lockerbie, Scotland, at a pro-Gadhafi rally in Tripoli. Abdel Baset al-Megrahi returned to Libya after Scottish authorities released him from prison in 2009 because of health concerns.