Hundreds of people gathered at the cemetery in Shatia al-Henshir, east of the capital, shouting "jihad, jihad;" "martyrs of Libya" and "God, Libya and Moamer."
Major Khuildi al-Hamidi, a long-time confidante of Kadhafi, attended the burial, which was punctuated by commemorative gunfire.
In contrast to government accounts, NATO said a "command and control bunker was struck in Brega early (Friday) morning, as the structure was being used by the Kadhafi regime to coordinate strikes against the Libyan civilian population."
"We are aware of allegations of civilian casualties in connection to this strike and although we cannot independently confirm the validity of the claim we regret any loss of life by innocent civilians when they occur."
An imam at a news conference with Ibrahim, identified as Nureddin al-Mijrah, called for revenge against the countries taking part in air strikes on Libya.
He urged Muslims across the world "to take revenge for our brothers who died today. For every man we should take down one thousand men... from France, Italy, Denmark, Britain, Qatar and the United Arab Emirates."
Kadhafi, whom Italy claimed on Friday might be wounded and on the run, said he was beyond the reach of NATO bombs.
"I want to say to the Crusader cowards that I live in a place where I cannot be reached or killed; I live in the hearts of millions," he said in an audio message aired late Friday on state television.
Italian Foreign Minister Franco Frattini had said Kadhafi was "probably outside of Tripoli and probably also injured," and that the reports came from the Roman Catholic bishop of Tripoli.
But the bishop, Giovanni Martinelli, denied making such comment.
"What the foreign minister said is not right because I never said that the Libyan leader was wounded," he told Radio France Internationale. "I only said that he was under psychological shock from the death of his son."
An April 30 air strike missed Kadhafi but killed his son, Seif al-Arab, and three of his grandchildren.
Ibrahim told reporters that Kadhafi was "in very good health, high morale, high spirits," and "he is in Tripoli."
Late Friday and early Saturday, a series of six loud explosions rocked Tripoli as jets flew overhead. Smoke could be seen rising from one of the sites in eastern Tripoli, witnesses said.
On the battlefield, rebels reportedly made new progress in their advance towards the western port city of Misrata.
An AFP correspondent said they had moved 20 kilometres (12 miles) in the east to reach the gates of Tavarga and in the west they reached the gates of the city of Zliten -- their next main military target on the road to Tripoli.
NATO said it hit two tanks in the Brega area on Friday and listed other "key hits" that day to include a "command and control node" in Tripoli as well as two surface-to-air missile launchers near the capital.
The alliance also reported striking 20 armoured vehicle storage buildings around Tripoli on Friday, as well as an armoured personnel carrier and four military trucks in the Misrata area.
On the diplomatic front, Jibril was received at the Elysee Palace by Sarkozy and French Prime Minister Francois Fillon.
Saturday's meeting, after which no statement was released, was also intended to discuss where to enlarge the international contact group on Libya, which France wants to include Russia and others.
France, Gambia, Italy and Qatar are the only countries to have formally recognised the rebels' National Transitional Council (TNC) as the Libyan people's legitimate representative.
During a meeting in Rome last week, the contact group decided to set up a special fund to help the rebels.
On Friday, Jibril was received at the White House by President Barack Obama's national security adviser Tom Donilon, but failed to garner the prize of US recognition.
The White House, however, said it was working with Congress on changes to the law to allow a portion of around $30 billion (21 billion euros) in Kadhafi regime assets blocked in the United States to be funneled towards the opposition.
On Saturday, rebel chief Mustafa Abdul Jalil held what the insurgents billed as a "town hall" meeting in the rebel stronghold of Benghazi with leaders from western cities that remain under Kadhafi's control.
Separately, the NTC issued a statement encouraging people to save fuel.
"In the same way that Libyan youth rose up on their own to liberate our country, sometimes with the sacrifice of their lives, we firmly believe that Libyans can manage their own consumption of fuel without the need for an administrative decision to be issued," it said.
And the UN special envoy for Libya, Abdul Ilah al-Khatib, said in Athens that he would travel to Tripoli on Sunday for talks with Prime Minister Baghdadi Mahmudi.
UN chief Ban Ki-moon this week called for an immediate halt to attacks on civilians and "immediate verifiable ceasefire negotiations towards the peaceful resolution of the conflict and unimpeded access to humanitarian workers."