* Gaddafi due to be burried in undisclosed location
* Formal "liberation" expected to be declared Saturday
* New leaders, Western backers hail dawn of new Libya
* Challenge now to impose order on array of armed groups
By Rania El Gamal and Tim Gaynor
SIRTE, Libya, Oct 21 Muammar Gaddafi was killed after being captured by the Libyan fighters he once scorned as "rats", cornered and shot in the head after they overrun his last bastion of resistance in his hometown of Sirte.
His body, bloodied, half naked, Gaddafi's trademark long curls hanging limp around a rarely seen bald spot, was delivered, a prize of war, to Misrata, the city west of Sirte whose siege and months of suffering at the hands of Gaddafi's artillery and sniper made it a symbol of the rebel cause.
A quick and secret burial was due later on Friday.
"It's time to start a new Libya, a united Libya," Prime Minister Mahmoud Jibril declared. "One people, one future."
A formal announcement of Libya's liberation, which will set the clock ticking on a timeline to elections, would be made on Saturday, Libyan officials said.
Two months after Western-backed rebels ended 42 years of eccentric one-man rule by capturing the capital Tripoli, his death ended a nervous hiatus for the new interim government.
U.S. President Barack Obama, in a veiled dig at the Syrian and other leaders resisting the democrats of the Arab Spring, declared "the rule of an iron fist inevitably comes to an end".
But Gaddafi's death is a setback to campaigners seeking the full truth about the 1988 bombing over Lockerbie in Scotland of Pan Am flight 103 which claimed 270 lives, mainly Americans, and for which one of Gaddafi's agents was convicted.
Jim Swire, the father of one of the Lockerbie victims, said: "There is much still to be resolved and we may now have lost an opportunity for getting nearer the truth."
"That's for Lockerbie," said the front-page headline in The Sun, Britain's best selling daily newspaper.
Confusion over Gaddafi's death was a reminder of the challenge for Libyans to now summon order out of the armed chaos that is the legacy of eight months of grinding conflict.
The killing or capture of senior aides, including possibly two sons, as an armoured convoy braved NATO air strikes in a desperate bid to break out of Sirte, may ease fears of diehards regrouping elsewhere - though cellphone video, apparently of Gaddafi alive and being beaten, may inflame his sympathisers.
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As news of Gaddafi's demise spread, people poured into the streets in jubilation. Joyous fighters fired their weapons in the air, shouting "Allahu Akbar".
Others wrote graffiti on the parapets of the highway outside Sirte. One said simply: "Gaddafi was captured here".
Jibril, reading what he said was a post-mortem report, said Gaddafi was hauled unresisting from a "sewage pipe". He was then shot in the arm and put in a truck which was "caught in crossfire" as it ferried the 69-year-old to hospital.
"He was hit by a bullet in the head," Jibril said, adding it was unclear which side had fired the fatal shot.
French President Nicolas Sarkozy, who spearheaded a Franco-British move in NATO to back the revolt against Gaddafi hailed a turn of events that few had expected so soon, since there had been little evidence that Gaddafi himself was in Sirte.
But he also alluded to fears that, without the glue of hatred for Gaddafi, the new Libya could descend, like Saddam Hussein's Iraq, into bloody factionalism: "The liberation of Sirte must signal ... the start of a process ... to establish a democratic system in which all groups in the country have their place and where fundamental freedoms are guaranteed," he said.
NATO, keen to portray the victory as that of the Libyans themselves, said it would wind down its military mission.
"KEEP HIM ALIVE"
The circumstances of the death of Gaddafi, who had vowed to go down fighting, remained obscure. Jerky video showed a man with Gaddafi's distinctive long, curly hair, bloodied and staggering under blows from armed men, apparently NTC fighters.
The brief footage showed him being hauled by his hair from the hood of a truck. To the shouts of someone saying "Keep him alive", he disappears from view and gunshots are heard.
"While he was being taken away, they beat him and then they killed him," a senior source in the NTC told Reuters before Jibril spoke of crossfire. "He might have been resisting."
Officials said Gaddafi's son Mo'tassim, also seen bleeding but alive in a video, had also died. Another son, heir-apparent Saif al-Islam, was variously reported to be surrounded, captured or killed as conflicting accounts of the day's events crackled around networks of NTC fighters rejoicing in Sirte.
In Benghazi, where in February Gaddafi disdainfully said he would hunt down the "rats" who had emulated their Tunisian and Egyptian neighbours by rising up against an unloved autocrat, thousands took to the streets, loosing off weapons and dancing under the old tricolour flag revived by Gaddafi's opponents.
Mansour el Ferjani, 49, a Benghazi bank clerk and father of five posed his 9-year-old son for a photograph holding a Kalashnikov rifle: "Don't think I will give this gun to my son," he said. "Now that the war is over we must give up our weapons and the children must go to school.
Accounts were hazy of his final hours, as befitted a man who retained an aura of mystery in the desert down the decades as he first tormented "colonial" Western powers by sponsoring militant bomb-makers from the IRA to the PLO and then embraced the likes of Tony Blair and Silvio Berlusconi in return for investment in Libya's extensive oil and gas fields.
There was no shortage of fighters willing to claim they saw Gaddafi, who long vowed to die in battle, cringeing below ground, like Saddam eight years ago, and pleading for his life.
One description, pieced together from various sources, suggests Gaddafi tried to break out of his final redoubt at dawn in a convoy of vehicles after weeks of dogged resistance.
However, he was stopped by a French air strike and captured, possibly some hours later, after gun battles with NTC fighters who found him hiding in a drainage culvert.
NATO said its warplanes fired on a convoy near Sirte about 8:30 a.m. (0630 GMT), striking two military vehicles in the group, but could not confirm that Gaddafi had been a passenger. France later said its jets had halted the convoy. (Additional reporting by Taha Zargoun in Sirte, Barry Malone, Yasmine Saleh and Jessica Donati in Tripoli, Brian Rohan in Benghazi, Jon Hemming in Tunis, Edmund Blair and Yasmine Saleh in Cairo, Samia Nakhoul in Amman, Christian Lowe in Algiers, Tim Castle, Peter Apps and William Maclean in London, David Brunnstrom in Brussels, Alister Bull, Jeff Mason and Laura MacInnis in Washington and Vicky Buffery in Paris; Writing by Alastair Macdonald; Editing by Giles Elgood)
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