Ahead of the conference in the French capital, France said it will unblock 1.5 billion euros in Libyan assets, while Russia joined dozens of other countries in recognising the rebels' National Transitional Council (NTC).

Seif al-Islam's message of defiance came as another Qadhafi son, Saadi, expressed readiness to surrender and the rebels announced the capture of former foreign minister Abdelati al-Obeidi.

"We are fine. The leadership is fine and the leader is fine," Seif al-Islam told Syria-based Arrai Oruba television, -- the crumbling regime's mouthpiece -- in an audio message late Wednesday.

"We are happy, we are drinking coffee and tea with our companions and we are fighting.

"I am talking to you from a suburb of Tripoli. We want to reassure the Libyan people that we are still here. The resistance continues and victory is near."

Seif al-Islam warned the rebels against any attack on his father's hometown of Sirte, the last major centre in loyalist hands.

"They're welcome if they think the battle of Sirte will be a walkover. Twenty thousand armed men are in the town and ready" to fight, he said.

NTC vice chairman Abdel Hafiz Ghogha, told AFP that Seif al-Islam was delusional.

"Seif al-Islam says that victory is near, but it is the victory of the (rebellion) that is near. He lives in a dream," Ghogha said in the rebels' eastern bastion Benghazi.

Saadi Qadhafi, meanwhile, appeared to express a readiness to surrender.

"If my surrender stops the spilling of blood, I am ready to give myself up tonight," he told Al-Arabiya television in an audio interview, adding that he had "no problem" with the rebels ruling Libya.

Mahdi al-Harati, vice chairman of the rebel military council, told reporters in Tripoli that negotiations had opened on the surrender of Saadi.

"He is reluctant but, if he wants to surrender, his life will be safe, God willing. If there is an agreement, there will be no problems," Harati said.

He also confirmed the arrest of Qadhafi's foreign minister.

"Yes, Abdelati al-Obeidi was arrested today," he said, without elaborating.

There has been no word from Qadhafi himself since he delivered an audio message on Arrai Oruba after rebels overran his headquarters in Tripoli, describing them as "rats"and urging his followers to fight them in the streets.

Speculation of his whereabouts range from being holed up in Sirte on the Mediterranean coast, in Bani Walid, a desert town to its southwest, or in the outskirts of the capital.

Omar Hariri, head of the rebels' military affairs, told AFP he was "80 percent certain that Qadhafi is still in Libya."

"We think he is in Libya," said Ahmed Darrad, who is charged with overseeing the interior ministry until a new government is elected.

"It is our right to kill him," Darrad added.

Thursday's conference in the French capital, which will be attended by delegates from 60 countries, is expected to discuss funding for Libya as well as police training and diplomatic recognition for its new rulers.

French Foreign Minister Alain Juppe said ahead of the meeting that France is to unblock 1.5 billion euros in frozen Libyan assets for the NTC.

"There are tens of billions of euros in frozen assets. The Americans have unblocked theirs and the British, French and Germans are doing the same," he told RTL radio.

US Secretary of State Hillary Clinton will be in Paris to sound out the rebels on what officials in Washington describe as their "enormous" needs as they try to establish a new government in Tripoli.

The "credibility" of the NTC, the political umbrella for the rebels, rests on such achievements, a senior US official told reporters on condition of anonymity on Wednesday.

The NTC is recognised by the United States and dozens of other countries -- with Russia joining the ranks on Thursday -- as Libya's interim governing authority, but how well the rebels can bring security to Tripoli and deal with running a country remain in doubt.

Urgent needs in Tripoli -- where Qadhafi forces were overrun in fierce battles more than a week ago -- are water, food, fuel and electricity, officials say.

"The needs are enormous. Qadhafi has left them... with a shattered country," the US official said. How to deal with Qadhafi if he is finally captured following a six-month revolt is also a worry for world leaders.

The "Friends of Libya" conference comes as the rebels try to wipe out the last pockets of resistance from Qadhafi fighters.

Rebel military spokesman Colonel Ahmed Omar Bani told a news conference in Benghazi that his forces were "ready for a final military battle," describing a Saturday ultimatum given loyalists to surrender as "zero hour."