World leaders hailed the death of former Libyan leader Moamer Kadhafi as the end of an era of violence and tyranny, and held out hope for a better future for the North African nation.

As Libyans fired automatic weapons into the air and danced for joy, US President Barack Obama said the death of the man Thursday who had ruled the oil-rich country with an iron fist for 42 years ended a long, painful chapter.

"This is a momentous day in the history of Libya, the dark shadow of tyranny has been lifted," Obama said, adding that Kadhafi's demise vindicated the collective military action launched by the West.

Hours after Libya's interim government, the National Transitional Council (NTC), announced Kadhafi's death, Obama urged the country to look to the future and build a "democratic" and "tolerant" nation.

British Prime Minister David Cameron also welcomed a chance for Libya's "democratic future" as he remembered Kadhafi's victims, including those who died in the 1988 bombing of a Pan Am jet over the Scottish town of Lockerbie.

French President Nicolas Sarkozy said the Libyan people had fought "to liberate themselves from the dictatorial and violent regime imposed on them for more than 40 years."

French, US and British forces spearheaded the NATO air campaign against Kadhafi's military, which has launched nearly 1,000 strike sorties since March 31.

Speaking in Islamabad, Washington's chief diplomat Hillary Clinton said it was "the start of a new era for the Libyan people", a sentiment echoed in Beijing.

China has significant economic interests in Libya, had long helped prop up Kadhafi's regime before the uprising began, and had criticised the NATO air strikes.

"We hope Libya will be able to start an inclusive political transition process as soon as possible to safeguard ethnic and national unity and achieve social stability," said foreign ministry spokeswoman Jiang Yu.

Japan also pledged its support and said the NTC had asked for help including prosthetic arms and legs for those wounded in clashes.

As the alliance announced it would begin winding down its six-month mission, NATO Secretary General Anders Fogh Rasmussen invited the Libyan people to "truly decide their own future."

But not all leaders cheered the news, with longtime Kadhafi supporter Venezuelan President Hugo Chavez, saying: "They assassinated him. It is another outrage. We shall remember Kadhafi our whole lives as a great fighter, a revolutionary and a martyr."

Iran, which backed the uprising, said Kadhafi's death should spell a swift end to NATO intervention.

"There is no longer any pretext for foreign military intervention in Libya and it is vital that foreign forces withdraw immediately to allow the Libyan people to determine its own future," the official IRNA news agency quoted foreign ministry spokesman Ramin Mehmanparast as saying.

Egypt's government expressed hope for a "new chapter" in Libya and pledged support in rebuilding the country.

And Iraqi Prime Minister Nuri al-Maliki said Kadhafi's demise and that of former Iraqi dictator Saddam Hussein were "proof of the potential of the people."

The events in Libya ushered in a "historic transition" for the country, said UN chief Ban Ki-moon.

In Italy, Libya's former colonial ruler, Prime Minister Silvio Berlusconi said "now the war is over."

The Vatican's number two, Cardinal Tarcisio Bertone, prayed for "peace in the country and democracy," while in Brussels, the European Union welcomed "the end of an era of despotism."

Families of the US victims of the Lockerbie bombing applauded the Libyan people, but urged the country's new leaders to bring the other perpetrators to justice.

Kadhafi was accused of ordering the bombing that killed 259 people on the plane, most of them Americans, as well as 11 Scots on the ground.

The only person convicted, Libyan agent Abdelbaset Ali Mohmet al-Megrahi, was released by Scotland in November 2009 after doctors said he had three months to live. He returned to Libya and is still alive.

German Chancellor Angela Merkel said Kadhafi's death left the way clear for a new, peaceful, political start, urging the country to move swiftly toward democracy.

Canberra, which spearheaded international humanitarian and diplomatic efforts during Libya's civil war, said the aid would continue.

Libyans' aspirations for human dignity "can be suppressed, but they cannot be denied," said Australian Prime Minister Julia Gillard.

Meanwhile, two of the five Bulgarian nurses imprisoned in Libya for eight years over an HIV scandal said Kadhafi "got what he deserved."

"The news made me very happy. It's a punishment. A dog like him deserved to die like a dog," Valya Chervenyashka told AFP. The nurses were tortured and twice sentenced to death under Kadhafi's regime.