* Ceasefire holding in oasis town of Sabh-Reuters reporters
* Prime minister meets representatives of warring sides
* Clashes underline fragility of Libya after Gaddafi
By Marie-Louise Gumuchian
SABHA, Libya, April 1 Libya's prime minister flew in to a desert oasis city on Sunday to try to patch up a tribal dispute that has killed about 150 people over the past week and underscored the ethnic faultlines threatening Libya's stability.
A Reuters team which flew with the prime minister to Sabha, about 750 km south of the Libyan capital, said a ceasefire appeared to be holding between the Tibu ethnic group and the Sabha militias with which they had been clashing.
Smashed windows at a conference centre and burned-out vehicles in a Tibu-controlled neighbourhood, bore testimony to the fighting over the past days, some of the worst since a revolt last year ousted Libyan leader Muammar Gaddafi.
Asked about the situation in Sabha, Prime Minister Abdurrahim El-Keib told Reuters: "It's much better than I thought."
He said he would hold talks with both the Tibu ethnic group, which has ties to the neighbouring country of Chad, and local militias from Sabha who resent the Tibu as outsiders.
"Every Libyan is important to us. We're going to take care of them like we do take care of any other Libyan, like our brothers and sisters," Keib told Reuters after addressing about 500 local people from the non-Tibu camp.
"This problem has a historical background... The past regime has used and abused this problem," he said, in reference to Gaddafi's tactic of playing up tribal differences to weaken any opposition against him.
Keib was then heckled by a man who was shouting that the government was late in acting to stop the clashes and he called on the military to deal with the Tibu.
Keib tried to talk to the heckler but his security detail ushered him into a car to head onto his next meeting, with Tibu elders.
As his convoy drove through Tibu-controlled neighbourhoods, fighters from the tribe lined the roads, with rifles in their hands. They shouted "Allahu Akbar!" (God is greatest), and smiled and waved at the prime minister's motorcade.
Once at the venue for the meeting, Keib listened as Tibu representatives, sitting in a circle on mats laid out on the ground, described how the clashes had unfolded.
Earlier on Sunday, on the journey to Sabha from the airport where he landed, the prime minister's motorcade was accompanied by a heavy security escort, which included vehicles mounted with anti-aircraft guns.
At the entrance to Sabha, militia men from the coastal city of Misrata stood guard. They had been despatched by the government to help restore order. (Writing by Christian Lowe; Editing by Karolina Tagaris)