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William Hague has said the UK will recognise the Libyan rebel council as the "sole governmental authority", as Gaddafi-regime diplomats are expelled.
The Libyan charge d'affaires was called to the Foreign Office earlier to be told he and other diplomats must leave.
Instead the UK will ask the National Transitional Council to appoint a new diplomatic envoy.
It follows similar moves by the US and France. The UK previously said it recognised "countries not governments".
A Foreign Office spokesman said that had not changed and said it was a political, not legal recognition.
The green flag of the Gaddafi regime was still flying outside the embassy in Knightsbridge on Wednesday afternoon and attempts to reach embassy staff for comment were not successful. Protesters carrying the red, green and black flag of the Libyan rebels gathered outside.
Libyan rebels and pro-Gaddafi forces are still locked in battle, five months after an uprising began against Muammar Gaddafi's 42-year rule, as Nato continues to enforce a UN-backed no-fly zone over the country.
'Sole authority' At a press conference earlier, Mr Hague said the NTC had shown its commitment to a "more open and democratic Libya... in stark contrast to Gaddafi whose brutality against the Libyan people has stripped him of all legitimacy".
He said a recent meeting of the Libya contact group in Istanbul had decided to treat the NTC as the legitimate government authority in Libya - and he was outlining the UK's response to that.
The UK would now deal with the NTC "on the same basis as other governments around the world" - and as a result the Libyan charge d'affaires had been summoned to the Foreign Office to be told all Gaddafi regime diplomats must now leave. It is thought that eight Libyan diplomats remain at the embassy in Knightsbridge.
Continue reading the main story [h=2]Start Quote[/h]
"We no longer recognise them as the representatives of the Libyan government and we are inviting the National Transitional Council to appoint a new Libyan diplomatic envoy to take over the Libyan Embassy in London," he said.
The change meant the UK could give "greater practical assistance than we've been able to give so far", he added.
The Foreign Office said the charge d'affaires, Khaled Benshaban, would be given three days to leave - while others would be decided on a "case by case basis".
Mr Hague said he was working with the NTC and Libyan banks and would do "all we can" to ensure Libyan students in the UK continue to receive the funds currently paid for by the Libyan embassy.
Assets unfrozen The foreign secretary also outlined measures to unfreeze assets worth £91m belonging to an oil company now controlled by the NTC to help meet "basic needs" in Libya.
More work will be done over the next few weeks to unfreeze more Libyan assets in the UK, including stocks of currency and other assets of the Libyan central bank.
Protesters gathered outside the embassy to demand the green flag of Gaddafi be replaced
Mr Hague said: "I'm making this announcement today to reflect the facts on the ground and to increase support for those fighting and working for a better future in Libya.
"We will sustain our actions for as long as necessary and our recent decision to deploy an additional four Tornado aircraft is a concrete illustration of this.
"What I have announced today will allow us to give further assistance to the people of Libya and underline the message to the Gaddafi regime that their legitimacy has come to an end."
For Labour, shadow foreign office minister Stephen Twigg told the BBC: "We agree that the National Transitional Council is best able to represent the people of Libya, so it makes sense to recognise them, I hope other countries will also recognise them, and it's time for Gaddafi's diplomats to leave London."
The UK embassy in Tripoli suspended operations in February but it has a diplomatic mission in rebel-held Benghazi. Libyan ambassador to the UK Omar Jelban was expelled in May.
This week Mr Hague suggested Col Gaddafi may not have to go into exile should he leave power - saying it was a "question for the Libyans".
Source: BBC BBC News - UK expels Gaddafi diplomats and recognises Libya rebels
The Libyan charge d'affaires was called to the Foreign Office earlier to be told he and other diplomats must leave.
Instead the UK will ask the National Transitional Council to appoint a new diplomatic envoy.
It follows similar moves by the US and France. The UK previously said it recognised "countries not governments".
A Foreign Office spokesman said that had not changed and said it was a political, not legal recognition.
The green flag of the Gaddafi regime was still flying outside the embassy in Knightsbridge on Wednesday afternoon and attempts to reach embassy staff for comment were not successful. Protesters carrying the red, green and black flag of the Libyan rebels gathered outside.
Libyan rebels and pro-Gaddafi forces are still locked in battle, five months after an uprising began against Muammar Gaddafi's 42-year rule, as Nato continues to enforce a UN-backed no-fly zone over the country.
'Sole authority' At a press conference earlier, Mr Hague said the NTC had shown its commitment to a "more open and democratic Libya... in stark contrast to Gaddafi whose brutality against the Libyan people has stripped him of all legitimacy".
He said a recent meeting of the Libya contact group in Istanbul had decided to treat the NTC as the legitimate government authority in Libya - and he was outlining the UK's response to that.
The UK would now deal with the NTC "on the same basis as other governments around the world" - and as a result the Libyan charge d'affaires had been summoned to the Foreign Office to be told all Gaddafi regime diplomats must now leave. It is thought that eight Libyan diplomats remain at the embassy in Knightsbridge.
Continue reading the main story [h=2]Start Quote[/h]
We will sustain our actions for as long as necessary
End Quote William Hague UK Foreign Secretary
"We no longer recognise them as the representatives of the Libyan government and we are inviting the National Transitional Council to appoint a new Libyan diplomatic envoy to take over the Libyan Embassy in London," he said.
The change meant the UK could give "greater practical assistance than we've been able to give so far", he added.
The Foreign Office said the charge d'affaires, Khaled Benshaban, would be given three days to leave - while others would be decided on a "case by case basis".
Mr Hague said he was working with the NTC and Libyan banks and would do "all we can" to ensure Libyan students in the UK continue to receive the funds currently paid for by the Libyan embassy.
Assets unfrozen The foreign secretary also outlined measures to unfreeze assets worth £91m belonging to an oil company now controlled by the NTC to help meet "basic needs" in Libya.
More work will be done over the next few weeks to unfreeze more Libyan assets in the UK, including stocks of currency and other assets of the Libyan central bank.
Mr Hague said: "I'm making this announcement today to reflect the facts on the ground and to increase support for those fighting and working for a better future in Libya.
"We will sustain our actions for as long as necessary and our recent decision to deploy an additional four Tornado aircraft is a concrete illustration of this.
"What I have announced today will allow us to give further assistance to the people of Libya and underline the message to the Gaddafi regime that their legitimacy has come to an end."
For Labour, shadow foreign office minister Stephen Twigg told the BBC: "We agree that the National Transitional Council is best able to represent the people of Libya, so it makes sense to recognise them, I hope other countries will also recognise them, and it's time for Gaddafi's diplomats to leave London."
The UK embassy in Tripoli suspended operations in February but it has a diplomatic mission in rebel-held Benghazi. Libyan ambassador to the UK Omar Jelban was expelled in May.
This week Mr Hague suggested Col Gaddafi may not have to go into exile should he leave power - saying it was a "question for the Libyans".
Source: BBC BBC News - UK expels Gaddafi diplomats and recognises Libya rebels
