Britain and France have asked other members of Nato to step up air strikes on Libyan government forces.
UK Prime Minister David Cameron has traveled to Paris to discuss the Libyan conflict with President Sarkozy, and Anglo-French delegates at a Nato meeting have pushed hard for more allied action.
England and France fear the Libyan conflict could become a protracted stalemate.
At the Doha meeting of the Libya "contact group" comprising European powers, the United States, Middle East countries and a number of international organisations has agreed to set up a "temporary funding mechanism" for the anti-Gaddafi rebels in Libya.
The contact group also agreed to continue to provide the rebels with "material support", a decision which has been at the heart of the rebels' frustration with Nato.
The group reiterated its call for Muammar Gaddafi to step down.
Earlier, delegates were told by UN Secretary General Ban Ki-moon that more than half of Libya's population of six million might eventually require humanitarian aid.
French foreign minister, Alain Juppe, criticised Nato for not carrying out enough air strikes to stop the shelling of the besieged city of Misrata.
William Hague, the Foreign Secretary, said aircraft from other states must join attacks: "There are many other nations around Europe and indeed Arab nations who are part of this coalition. There is scope for some of them to move some of their aircraft from air defence into ground-strike capability."
Rebel leaders say they want more air attacks and claim Nato is using "minimum" power and should escalate attacks on heavy weapons used by regime forces.
Last night Nato confirmed that its planes had attacked a munitions dump, 13km from the Libyan capital Tripoli.
The rebels can only put a few thousand barely trained militiamen into the field, and even an escalation of the air war would not tip the military balance towards them. "Getting armed is not our priority," said Ali El-Essawi, the foreign minister of the National Council, acknowledging that the coalition is not going to supply arms in large quantities.
William Hague called for a temporary financial mechanism to support the rebel administration in eastern Libya. The rebels say they need $1.5bn and Italy suggested using frozen Libyan state assets. But the German foreign minister Guido Westerwelle criticised this move, asking: "The question is, is it legal? The answer is we don't know."
The rebels have in the past insisted that one of their problems is that they do not have heavy weaponry.
After his unsuccessful war in Chad in the 1980s, Col Gaddafi largely dissolved the Libyan army so there is no cadre of military specialists to go to the front or train new recruits.
In Benghazi some 3,000 rebels are receiving instruction, but most of this is "theoretical" according to officers and includes only a few days of weapons' practice.
The presence of Moussa Koussa, the former Libyan foreign minister who defected to Britain, on the margins of a Doha conference has so far had little impact.
The rebels refuse to speak to him and it is unclear how far he represents any constituency among senior Libyan officials around Col Gaddafi who might want to get rid of their leader.
Libyan opposition spokesman Mahmud Awad Shammam said the national council approved of a Turkish plan for a peaceful transition in Libya, but "they have to say the magic word - that Gaddafi must go".
In Tripoli, government spokesman Mussa Ibrahim attacked the West's "imperialist way of thinking", which he claimed was trying to determine the future of Libya.
- INDEPENDENT, AGENCIES