Obeidi, a former deputy foreign minister for European affairs, will replace Moussa Koussa who defected to Britain on March 30, Reuters reported on Tuesday.
Obeidi has also served as ambassador to Turkey and Italy and was involved in the talks to normalize Libya’s long-strained ties with the West.
He was recently sent to Greece, Turkey and Malta to negotiate about the conditions for a ceasefire and a political solution to the deadlock in the country. He has reportedly revealed a plan to replace Gaddafi with one of his sons and carry out some political reforms and a ceasefire.
The idea has been received with much criticism in Libya with revolutionary forces reiterating that they will not start talks unless Gaddafi leaves office.
As US-led airstrikes subside, revolutionary forces have slammed NATO for failing to take the right action to protect civilians, saying the military alliance has itself turned into a problem.