Militiamen attacked the Libyan Prime Minister's office Tuesday, following the suspension of a rewards scheme for former rebels earlier this year.
Prime Minister Abdulrahim el-Keib was not present when militiamen stormed the building.
At least 15 pick-up trucks mounted with anti-aircraft guns encircled the building, with more militias arriving as the afternoon progressed.
"Since the beginning of the revolution the rebels have not been paid," said Muntasir Sohe, who had joined the crowd watching the scene unfold. "They want their share and have no other choice; they made the revolution, but they don't get paid," he added.
Last month, due to widespread fraud and abuse, the interim authorities suspended a one-off cash payment for former rebels who had fought against Muammar Gaddafi, drawing the ire of fighters who insist they should be paid for their role in last year's insurgency.'
Paramedics on the scene confirmed the death of a 24-year-old, Mohammed Ali Gamoudi, but reports said as many as four people were killed.
The attack highlights the powerlessness of the country's interim authorities - seen as increasingly corrupt, incompetent and opaque - who are struggling to exert authority in a country torn by retribution and tribal rivalries, while preparing for elections next month.
Clashes have escalated over the past few months, leaving scores dead - most recently in coastal Zuwara and the oasis town of Sabha in the deep south.
Much of the problem stems from the fact that there is no real army or police capable of restraining the militias in the country; attempts to draw former rebels into the armed forces have met scant success.
Since the fall of Kadafi, Libya has broken up into a series of fiefdoms, guarded by heavily-armed militias leading some analysts to suggest that a Lebanon-style conflict - with tribal as opposed to sectarian dimensions - may break out.
A militiaman, Abu Jaela, his jet-black AK-47 sitting next to him in a truck mounted with heavy weapons, said that he had no particular complaint, but travelled from his Tripoli home when he heard that fighting had broken out.
"We have a small problem," he said, before being confronted by an angry militiaman who demanded that he stopped talking to the press.
As more militias arrived on the scene as evening set in, the situation remained unstable, with further shots fired into the air. Men cocked their guns and threatened, seemingly, rival militias who had turned up chasing rumors of violence.