Western powers are signaling an increased willingness to allow Moammar Gaddafi to remain in Libya if he agrees to step down after nearly 42 years as the country’s autocratic ruler, diplomats said Tuesday.

Britain this week became the third NATO member to say that Gaddafi might be permitted to stay if Libyan rebels were willing to accept his presence in the country under a deal. Some officials of the rebels’ Transitional National Council have suggested that they could accept having Gaddafi remain in Libya if he relinquished all political power.

“Obviously, him leaving Libya itself would be the best way of showing the Libyan people that they no longer have to live in fear, but as I have said all along, this is ultimately a question for Libyans to determine,” British Foreign Secretary William Hague told reporters Monday night before talks with his French counterpart, Alain Juppe.

Hague announced Wednesday that Britain is now recognizing the Transitional National Council as “the sole governmental authority” in Libya, a move that follows the United States and France in accepting the Benghazi-based rebel body as the country’s legitimate government. The recognition grants equal-nation status to the rebel government and allows about $150 million in previously frozen funds to flow to Gaddafi’s opponents.

Hague also ordered all remaining Gaddafi diplomats to leave the Libyan Embassy in London and said the building would be turned over to incoming envoys from the rebel council. The Foreign Office said the eight remaining diplomats and their dependents must leave Britain within three days.

Juppe said last week that France is open to a deal under which Gaddafi would quit as leader but remain in the country — a potentially crucial concession, given Gaddafi’s repeated refusal to accept exile in another country. Hours later, White House spokesman Jay Carney said Gaddafi must quit as leader “and then it’s up to the Libyan people to decide.”

The statements appeared to reflect lowered confidence in the rebels’ ability to defeat Gaddafi’s better-organized forces in the near future, even with the backing of NATO warplanes and helicopters, said diplomats and military experts.

The apparent softening toward Gaddafi drew skepticism from rebel fighters and new defiance from Gaddafi loyalists. In Tripoli, Gaddafi’s prime minister, Baghdadi al-Mahmoudi, said at a news conference that there would be no talks until NATO airstrikes cease. He also repeated vows that Gaddafi would not step down.

“The Libyan population has made itself clear: They are not negotiating the future of Moammar Gaddafi,” he said. “They are holding firm to the idea that the leader Moammar Gaddafi should remain the leader of this dignified country.”

Although Transitional National Council leaders have signaled flexibility on Gaddafi’s future, some rebels in western Libya have expressed doubts about granting concessions to an autocrat who continues to control legions of loyalists in the armed forces and security establishment. Gaddafi and his family also control key components of Libya’s economic infrastructure, including the oil, housing, electricity and cellular communications industries, rebels say.

“Gaddafi cannot remain in Libya because if he is here, we will never know peace,” said Tarek Ali, who served for seven years as one of Gaddafi’s bodyguards and is now a fighter in Zintan, in the western mountains. “You cannot seriously believe he is going to live in a house by the sea as a retired man.”

As NATO operations in Libya entered their fifth month, alliance officials acknowledged that there was little evidence that Gaddafi was preparing to leave soon. “He’s sitting pretty tight in Tripoli,” a senior NATO official said, speaking on the condition of anonymity because he is not authorized to speak to the media. “They’re still confident, and they’ve got plenty of capability.”

The official said initial demands by NATO states “may have overmatched the military perspective” from the beginning.

Britain’s Foreign Office said that Hague’s comments did not represent a policy shift, noting that Gaddafi still faces arrest warrants from the International Criminal Court — warrants that a future government of Libya would be obliged to honor.

Booth reported from Zintan, Libya. Correspondent Michael Birnbaum in Berlin contributed to this report.