Celebratory gunfire immediately rang out across Libya's main rebel-held city of Benghazi. Tracer bullets streaked across the night sky as preachers at mosques shouted "God is greatest!" over loudspeakers.
"This resolution demands an immediate ceasefire and a complete end to violence and attacks against civilians," the US ambassador to the UN, Susan Rice, said.
"The security council has authorized the use of force, including enforcement of a no-fly zone to protect civilians and civilian areas targeted by Colonel Kadhafi, his intelligence and security forces and his mercenaries," Rice said.
Kadhafi vowed earlier that his troops would take Benghazi within hours.
"The decision has been taken. Prepare yourselves. We will arrive tonight," Kadhafi said on state television. "Show them no mercy. The world needs to see Benghazi free."
His defense ministry, meanwhile, warned that foreign assaults on Libya would trigger retaliation putting "all air and maritime traffic in the Mediterranean" in danger.
The UN vote passed 10-0 with five abstentions in the 15 member council. Permanent members China and Russia were among those abstaining, but did not use their veto power. Germany also abstained.
Diplomats have indicated that air strikes from a coalition led by Britain, France and the United States -- but also including some Arab countries -- could now be imminent.
"We have very little time left. It is a matter of days. Perhaps it is a matter of hours," French Foreign Minister Alain Juppe said at the United Nations. "We should not arrive too late."
Juppe said the world had to act to support Libya, following peaceful revolts against authoritarian leaders across the Arab world.
"The world is living one of its great revolutions that changes the course of history," he said. "In Libya, alas, for a number of weeks the people's will has been shot down to its feet by Colonel Kadhafi."
A UN diplomat who asked not to be identified said that Qatar and the United Arab Emirates could be among the Arab nations to join a military coalition.
However, countries abstaining in the UN vote warned of an open-ended conflict that could undermine stability across the oil-rich region.
"There is a need to avoid such destabilizing developments," the Russian ambassador said, calling the resolution "most unfortunate."
Germany's ambassador foresaw "great risks. The likelihood of large-scale loss of life should not be underestimated. If the steps proposed turn out to be ineffective, we see the danger of being drawn into a protracted military conflict that would affect the wider region."
The UN vote set the stage for a dramatic widening of the war between Kadhafi and rag-tag rebel forces seeking the veteran strongman's overthrow.
The Libyan defense ministry warned that "any military operation against Libya will expose all air and maritime traffic in the Mediterranean to danger."
"Any civilian or military moving traffic will be the target of a Libyan counter-offensive," the official Jana news agency quoted the defense ministry spokesman as saying.
On the ground around Benghazi tensions mounted with rebel commanders ordering fighters to man artillery and missile batteries against the expected onslaught by government forces.
However, CNN reported that one of Kadhafi's sons, Saif al-Islam, had announced a change in tactics following the UN vote.
"He said they're going to change the tactics around Benghazi, that the army is not going to go into Benghazi. It's going to take up positions around the stronghold," the CNN correspondent said.
Amid conflicting claims, state television said loyalists were on the outskirts of Benghazi.
Allibya television said "the town of Zuwaytinah is under control (of loyalists) and armed forces are on the outskirts of Benghazi."
But a rebel spokesman told AFP by telephone: "The Kadhafi forces tried to carry out an air raid on the city but our anti-aircraft defenses repulsed the offensive and two planes were shot down."
Libyan television also said loyalists had overrun the rebel bastion of Misrata, 200 kilometres (125 miles) east of Tripoli. This was denied by a rebel spokesman.
"We still control the city, even its outskirts. Kadhafi is mobilizing his forces a few kilometers away," the spokesman said by phone.
He said 18 people, including three civilians, were "martyred" in fierce fighting on Wednesday and that "we inflicted huge losses to the Kadhafi forces, including 60 people killed."
A witness in the western town of Zintan said rebel fighters there were bracing for an attack.
As uncertainty reigned over the situation on the ground, aid agencies on Egypt's border with Libya braced for an onslaught of refugees if Kadhafi prevails.
"If Benghazi is taken, we are expecting 40,000 to 100,000 people, and we are not ready," said Andrea Oess, of Swiss Humanitarian Aid.
Elsewhere in the Middle East, Bahrain rounded up dissidents Thursday as the United Nations warned of "shocking and illegal" abuses in Bahrain where the US-backed Sunni Muslim rulers are waging a bloody crackdown on Shiite-led protesters.
Five hardline Shiite activists and one Sunni were arrested during the night, a parliamentarian from the Shiite opposition alliance said, after a day of violence that left five dead in the Sunni-ruled kingdom.
But the opposition vowed to press on with "peaceful" pro-democracy demonstrations, calling for protests after the Muslim weekly prayers on Friday and sit-in actions on Saturday.
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