“I can confirm that a small British diplomatic team is in Benghazi. We are in touch with them, but it would be inappropriate for me to comment further on that for reasons I’m quite sure you understand,” Fox told the BBC.

Despite repeated questions, Fox refused to say whether the group was in danger or was being held captive.

Libya is in turmoil as rebels fight to end Muammar Qaddafi’s 41-year rule.

“It is a very difficult situation. There are a number of different opposition groups to Col. Qaddafi in Libya. They do seem relatively disparate,” Fox said.

“We want to clearly understand what the dynamic is there because we want to be able to work with them to ensure the demise of the Qaddafi regime, to see a transition to greater stability in Libya and ultimately to more representative government,” he said.

Fox ruled out the use of British military ground forces in Libya but said a no-fly zone remained a possibility.

The Sunday Times reported that Libyan rebels had captured a British special forces unit in the east of the country after a secret diplomatic mission to make contact with opposition leaders backfired.
 

The team, understood to number up to eight SAS soldiers, were intercepted as they escorted a junior diplomat through rebel-held territory, the newspaper said.

The junior diplomat was preparing the way for a visit by a more senior colleague in an attempt to establish diplomatic contact with the rebels, the newspaper said.

The Foreign Office said it could neither “confirm or deny” the report.

Prime Minister David Cameron said last Tuesday that Britain was trying to step up contact with opposition forces in Benghazi “so we can get to know them better, what their intentions are.”

On Saturday the Geneva-based Human Rights Solidarity group, which employs a number of Libyan exiles, told Reuters by telephone that a team of “eight special forces personnel” had been seized by rebels. Both the Ministry of Defense and Foreign Office repeatedly declined to comment on the group’s report.

The SAS intervention apparently angered Libyan opposition figures, who ordered the soldiers locked up on a military base, according to the Sunday Times.

Qaddafi’s opponents fear he could use any evidence of Western military intervention to rally support.

Fox said a no-fly zone over Libya remained a possibility and NATO defense ministers meeting in Brussels on March 10-11 would examine no-fly zone options.

“We’ve known for some time that Col. Qaddafi would be well prepared for this sort of uprising in his country. It does seem that he has got the support of some of the military, we’ve known in the past that they have been willing to use the military assets they have pretty ruthlessly if pressed,” he said.

Asked whether British ground forces could be used in Libya, Fox said: “We had a spearhead element (of troops) made ready to deal with humanitarian aid ... There was no and there is no plan to use British land forces.”