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Libya's Prime Minister al-Baghdadi Ali al-Mahmoudi holds a news conference in Tripoli on July 26, 2011.

Caren Firouz/Reuters

Moammar Gadhafi remains defiantly in power after more than four months of bombing, and the nations carrying out most of the air strikes want to end the war, even if it means allowing the dictator to step down but remain in Libya.

The bloody stalemate in the ground war has dimmed early hopes that ill-equipped but enthusiastic rebels could topple the despot. With the holy Muslim month of Ramadan looming and no military end in sight, Britain has publicly echoed an offer first floated by France that would allow for Colonel Gadhafi to talk his way into retirement.

A senior Canadian official said Ottawa could accept such an outcome. Col. Gadhafi could remain in Libya as long as there are controls to ensure he and his family have no hold on power, the official said.

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That matched British Foreign Secretary William Hague, who said: "We are absolutely clear that at the end of the day, Gadhafi is going to have to abandon power, all military and civil responsibility." But, Mr. Hague added: "Then it will be for the Libyan people themselves to decide what [his]fate will be either inside Libya or outside Libya." Both London and Paris still rule out any power-sharing or splitting of the oil-rich North African nation.

Chris Day, a spokesman for Canadian Foreign Minister John Baird, who visited the rebel stronghold of Benghazi in June, said: "A solution in Libya must be led by Libyans. We're hopeful for an expedient and peaceful solution."

After failing to achieve a quick ouster, "there's a need to improvise a strategy to deal with the military stalemate," said Roland Paris, director of the Centre for International Policy Studies at the University of Ottawa. "It's a reflection of the situation they find themselves in."

The rebels, now formally recognized by the United States as well as Britain and France as Libya's governing authority, have vacillated over the whether Col. Gadhafi could remain in some sort of internal exile.

"Gadhafi can stay in Libya but it will have conditions," said Mustafa Abdel Jalil, head of the Transitional National Council, the Benghazi-based opposition coalition. "We will decide where he stays and who watches him," Mr. Jalil told the Wall Street Journal.

But Mahmoud Shammam, a TNC spokesman, said no such offer was made, adding Mr. Jalil had been misquoted. "Let him [Gadhafi]and his family go to hell," Mr. Shammam said.

The political disarray matches the military stalemate, with no clear outcome emerging.

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Still, the open offers of talks and hints that Col. Gadhafi might avoid death or being handed over to the International Criminal Court seem designed to wean away the few remaining ministers and senior officers still loyal to the Libyan leader. They also reflect the stark reality that - so far - the war has failed to oust the dictator.

After 130 days of air strikes - including a relentless pounding of Col. Gadhafi's bunkers in Tripoli - the wily leader remains unscathed, reputedly living in hospitals and mosques secure in the knowledge that allied warplanes won't target them. The early heady days of ill-disciplined rebel advances with a rabble of ill-trained and ill-equipped volunteers headed for the fronts in cars has stalled in bloody, grinding stalemate in embattled cities such as Misurata.

Forces loyal to Col. Gadhafi, both Libyans and large numbers of West African mercenaries, have blunted rebel advances. Even after the loss of hundreds of tanks, armoured personnel carriers and rocket launders to NATO bombing, they remain more than a match for the rebels.

"We are generally in a stalemate," said America's top soldier, Admiral Michael Mullen, chairman of the Joint Chiefs of Staff, although he added that he expected the bombing campaign to deliver. "In the long run - and I don't know how long that is - but in the long run, I think it's a strategy which will work with respect to the removal of Gadhafi from power."

Nominally, NATO's air war isn't intended to remove the Libyan leader, only to protect civilians.

But with some key players - notably France - dropping arms to the rebels, there have been a raft of accusations of "mission creep." Russia, one of the five veto-wielding permanent members of the United Nations Security Council, says the air strikes have gone far beyond the original mandate.

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But with President Barack Obama restricting U.S. forces to a behind-the-scenes role, Britain and France are stretched thin. Together their warplanes have flown nearly two-thirds of the thousands of sorties to date. Britain's embattled Prime Minister David Cameron has reportedly said he wants the air war over before his party's convention in October. Meanwhile, senior French officers have warned that its air force - and the country's single aircraft carrier - will be worn out if the campaign stretches on much longer. Seven Canadian CF-18s have also been flying near-daily bombing runs since mid-March.

NATO spokeswoman Carmen Romero said the air strikes would continue as long as needed. Col. Gadhafi cannot "wait us out," she said.

In Tripoli, the Gadhafi regime's prime minister, Al-Baghdadi Al-Mahmoudi, insisted the leader - already in power for more than four decades - would never step down. There is no "negotiating the future of Moammar Gadhafi," he said, saying Libyans are "holding firm to the idea that the leader, Moammar Gadhafi, should remain the leader of this dignified country."

But a UN team in Tripoli reports worsening fuel and some food shortages, suggesting the Gadhafi regime is struggling to provide for the population in the capital, despite it stockpiles of cash and gold.

While the rebels control most of eastern Libya, oil and gas production in both rebel and government-held zones is far below pre-uprising levels.

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