
The man considered the colonel's number two, Interior Minister Abdel Fattah Younes al-Abidi, is among senior figures who have joined the opposition.
The UN Security Council demanded an end to the violence on Tuesday, while the Arab League suspended Libya.
Protesters greeted an angry speech by the veteran leader with defiance.
The BBC's Jon Leyne, in eastern Libya, says people there believe the government now controls just a few pockets of territory including parts of the capital Tripoli and the southern town of Sabha.
At least 300 people have been killed so far in the uprising, which has spread from the east of the country, although Italian Foreign Minister Franco Frattini told reporters in Rome on Wednesday that a more realistic death toll was 1,000.
Mr Frattini also told Corriere della Sera newspaper he feared an immigrant exodus on a "biblical scale" if Col Gaddafi was toppled, predicting up to 300,000 Libyans could try to flee their country.
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Libyans here reacted with anger and derision to Colonel Gaddafi's defiant speech. They fear he's out to destroy the country before he's finally deposed.
There are reports that some forces loyal to the Libyan leader, possibly foreign mercenaries, have attacked an airbase in the east of the country.
But apart from that, he's lost complete control of this area, which is now patrolled by local militias. The belief here is that government control is now down to a few pockets, including parts of the capital Tripoli and other strongholds including the southern town of Sabha.
As well as Col Gaddafi's interior minister, many senior generals have also defected, including General Mahmud, the commander here in the east and a veteran of the 1969 revolution.
Col Gaddafi's support is down to an inner core but he's clearly not going to give up the fight.
The UN Security Council's statement in New York late on Tuesday came amid reports foreign mercenaries have been attacking civilians and warplanes bombing protesters.The council's 15 members said the Libyan government should "meet its responsibility to protect its population", act with restraint, and respect human rights and international humanitarian law.
The statement said the Libyan authorities should also hold accountable those people responsible for attacking civilians, and respect the rights of its citizens.
Libya's deputy permanent representative to the UN, Ibrahim Dabbashi - who called on Monday for Col Gaddafi to step down - said the statement was "not strong enough".
Meanwhile, Interior Minister Mr al-Abidi - head of the powerful Thunderbolt commando brigade - read a resignation statement from his desk, urging the army to support the people and their "legitimate demands".
The Libyan ambassador to Indonesia, Singapore and Brunei became the latest figure to quit on Wednesday, in protest at the crackdown on the Libyan people.
There are also reports that a senior aide to Saif al-Islam Gaddafi, a son of the Libyan leader, has quit.
"I resigned from the Gaddafi Foundation on Sunday to express dismay against violence," Youssef Sawani said in a text message sent to Reuters news agency.
Col Gaddafi: ''I will die a martyr at the end''The BBC's Jon Leyne, in eastern Libya, says people there reacted with anger and derision to Col Gaddafi's speech on Tuesday in which he referred to the protesters as rats and cockroaches.
During the rambling 75-minute address on state TV, Col Gaddafi vowed to crush the revolt and die as a martyr.
Gunshots and blaring of car horns were heard in Tripoli after the speech, although it is not clear if protesters or Gaddafi loyalists were behind the noise.
German Chancellor Angela Merkel said Col Gaddafi's speech was "very, very appalling" and "amounted to him declaring war on his own people".

A.nemdil & Press Agencies
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