UPDATE 1-Libyan rebels will only discuss Gaddafi quitting
* Rebel council says will only talk about Gaddafi departure
* Comment responds to call for dialogue by ex-premier
(Updates with colour from Benghazi, comment from Tobruk)
BENGHAZI, Libya, March 7 (Reuters) - The rebel National Libyan Council said on Monday there was no room for broad dialogue with the government of Muammar Gaddafi and any talks must be on the basis that he quits.
The council, which speaks for mostly eastern areas controlled by opponents of Gaddafi, made clear its position after state television, tightly controlled by the Libyan leader, broadcast an address calling for talks.
Jadallah Azous Al-Talhi, a prime minister in the 1980s who is originally from eastern Libya, appeared on state television calling on elders in the rebel city of Benghazi for national dialogue to end the bloodshed.
Asked about the address, rebel official Ahmed Jabreel told Reuters: "Talhi is a close acquaintance of mine and he is widely respected in Libya as a man who stood up to Gaddafi.
"But we have made it clear all along that any negotiations must be on the basis that Gaddafi will step down. There can be no other compromise."
The fact that state television screened Talhi's appeal indicated that it was officially endorsed.
Until now Gaddafi and his entourage have shown little public appetite for dialogue, describing the rebels as armed gangs under the influence of drugs and manipulated by al Qaeda and foreign powers.
Residents of Benghazi, Libya's second biggest city where the uprising started, said the euphoria of driving out Gaddafi forces had started to wear off.
"After parties and celebrations, the people of Benghazi are now worrying about our people in the west," Salah Ben-Saud, 75, a former undersecretary at the agriculture ministry, said.
"They have been losing ground in some places and that has got them worried that the momentum of the revolution is slowing," he said, adding:
"I am over 70 and I'm living the best time of my life. I was telling my wife I would probably die before we see the back of Gaddafi."
The eastern city seemed more nervous after Gaddafi's forces staged counter-attacks, a Reuters correspondent said.
Young people in Internet cafes were telling each other to be brave as there was no sign that the government forces were giving up. "There is a fear he will retake the east," said the correspondent in the city.
Asked about reports of possible tensions in the eastern city of Tobruk, one rebel official said all was quiet.
"We are not hearing of any fighting in Tobruk. This looks like more rumours spread by the Gaddafi people, the usual attempt at psychological warfare," the official said.
Jamaa, a resident of Tobruk who declined to give a full name, told Reuters: "There has been no fighting here. Life is normal and people are going about their business.". (Reporting by Tom Pfeiffer, writing by Peter Millership; editing by Paul Taylor)
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