Several hours later, Al Jazeera television reported that rebels had struck a deal with delegates from the Gaddafi holdout town of Bani Walid, 150 km (90 miles) south of Tripoli, to enter it without fighting later on Tuesday.
The pan-Arab news channel, citing the anti-Gaddafi forces, said the fighters were expected to enter the town after the deal is formalized, which would likely be around midday.
Bani Walid has been one of the main remaining pockets of Gaddafi resistance in the country.
The convoy of between 200 and 250 vehicles was given an escort by the army of Niger, an impoverished and landlocked former French colony to the south of Libya, and might, according to a French military source, be joined by Gaddafi en route for neighboring Burkina Faso, which has offered him asylum.
It was not clear where the 69-year-old former leader was. He has broadcast defiance since being forced into hiding two weeks ago, and has previously vowed to die fighting on Libyan soil.
Gaddafi's son Saif al-Islam, the heir apparent before the uprising which ended his father's 42 years of personal rule two weeks ago, also was considering joining the convoy, the French source added. France played a leading role in the war against Gaddafi and such a large Libyan military convoy could hardly have moved safely without the knowledge and agreement of NATO air forces.
Sources told Reuters that France may have brokered an arrangement between the new Libyan government and Gaddafi.
But a spokesperson for the French foreign ministry in Paris could not confirm the report of the convoy's arrival in the northern Niger desert city of Agadez nor any offer to Gaddafi, who with Saif al-Islam is wanted for crimes against humanity by the International Criminal Court at The Hague.
Officials in other Western governments and in Libya's new ruling council were not immediately available for comment.
The sources said the convoy, probably including officers from army units based in the south of Libya, may have looped through Algeria rather than crossing the Libyan-Niger frontier directly. It arrived late on Monday near the northern city of Agadez. Algeria last week took in Gaddafi's wife, daughter and two other sons, angering the rebels who ended his 42-year rule.
"HIGH SPIRITS"
NATO warplanes and reconnaissance aircraft have been scouring Libya's deserts for large convoys of vehicles that may be carrying the other Gaddafis, making it unlikely that it could have crossed the border without some form of deal being struck.
Libya's new rulers have said they want to try Gaddafi before, possibly, handing him over to the International Criminal Court (ICC), which has charged him with crimes against humanity.
Gaddafi's fugitive spokesman Moussa Ibrahim said on Monday that the former ruler was in good health and good spirits somewhere in Libya. "Muammar Gaddafi is in excellent health and in very, very high spirits," Ibrahim said in remarks broadcast on television.
"He is in a place that will not be reached by those fractious groups, and he is in Libya," Ibrahim told Arrai TV.
The head of Gaddafi's security brigades, Mansour Dhao, along with more than 10 other Libyans, crossed into Niger on Sunday, two Niger officials had said earlier on Monday.
The French military source said he had been told the commander of Libya's southern forces, General Ali Khana, may also be in Niger, not far from the Libyan border.
He said he had been told that Gaddafi and Saif al-Islam would join Khana and catch up with the convoy should they choose to accept Burkina Faso's offer of exile.
Burkina Faso, also once a French colony and a former recipient of large amounts of Libyan aid, offered Gaddafi exile about two weeks ago but has also recognized the rebel National Transitional Council (NTC) as Libya's government.
Burkinabe Foreign Minister Yipene Djibril Bassolet said that Gaddafi could go into exile in his country even though it is a signatory of the ICC treaty.
Gaddafi has said he is ready to fight to the death on Libyan soil, although there have been a number of reports that he might seek refuge in one of the African nations on whom he once lavished some of Libya's oil wealth.
His spokesman Ibrahim said: "We will prevail in this struggle until victory ... We are still strong, and we can turn the tables over against those traitors and NATO allies."
BESIEGED TOWN
Last week, a senior NTC military commander said he believed Gaddafi was in Bani Walid, along with Saif al-Islam. Libyan forces have massed outside the town and built a field hospital in preparation for a possible last stand.
Some NTC officials said they had information that Saif al-Islam had fled Bani Walid on Saturday for the southern deserts that lead to the Niger and Algerian borders.
On-off talks involving tribal elders from Bani Walid and a fog of contradictory messages in recent days, reflected the complexities of dismantling the remnants of Gaddafi's rule and building a new political system.
At a military checkpoint some 60 km (40 miles) north of the town on the road to the capital, Abdallah Kanshil, who is running talks for the interim government, told journalists a peaceful handover was coming soon. Nevertheless, a dozen vehicles carrying NTC fighters arrived at the checkpoint.
"The surrender of the city is imminent," he said on Monday. "It is a matter of avoiding civilian casualties. Some snipers have surrendered their weapons ... Our forces are ready."
Similar statements have been made for days, however. With communications cut, there was no word from inside Bani Walid.
But 20 km closer to the town, NTC forces built a field hospital and installed 10 volunteer doctors to prepare for the possibility that Gaddafi loyalists would not give up.
"The presence of pro-Gaddafi forces in Bani Walid is the main problem. This is their last fight," said Mohamed Bin Dalla, one of the doctors. "If Bani Walid is resolved peacefully then other remaining conflicts will be also be resolved peacefully."
Forces loyal to the National Transitional Council are also trying to squeeze Gaddafi loyalists out of his hometown of Sirte, on the coast, and a swathe of territory in the desert.