Libyan leader Muammar Gaddafi is hiding in hospitals as he becomes increasingly “paranoid” about Nato air strikes, a diplomatic source said, quoting British intelligence reports.

The information has persuaded Nato powers engaged in the air campaign in Libya that now is the right time to increase the pressure on the veteran Gaddafi, the source said late on Thursday at the G8 summit in France.

“There is a strong consensus that we need to be turning the screw now and that is partly informed by our intelligence reports from the ground,” the European diplomatic source said on condition of anonymity.

Meanwhile, Russian Deputy Foreign Minister Sergei Ryabkov was quoted as saying yesterday that the Libyan leader must go, in Moscow’s strongest call yet for the embattled strongman to stand down.

“Yes, we are ready to admit... he needs to go,” Mr Ryabkov said on the sidelines of the G8 summit at Deauville in northwestern France.

“We believe that Col Gaddafi has forfeited legitimacy due to his actions... indeed we need to help him go,” Mr Ryabkov said.

The statement marked a ­dramatic change of tone for Moscow, which has been critical of UN-­sanctioned Western strikes on Col Gaddafi’s forces as they try to quash a pro-democracy rebellion.

Russia said it would ramp up diplomatic efforts to mediate an end to the conflict in Libya, after being encouraged to do by G8 partners during the two-day summit in France.

The US and France also ex­pressed that they were committed to finishing the job in Libya.

Russia’s dramatic shift – and an offer to mediate – came as British Prime Minister David Cameron said the Nato mission against Col Gaddafi was entering a new phase with the deployment of helicopter gunships to the conflict.

Later yesterday, the Libyan regime rejected calls from the G8 world powers for Col Gaddafi to stand down and said any initiative to resolve the crisis would have to go through the African Union.

“The G8 is an economic summit. We are not concerned by its decisions,” said Libya’s Deputy Foreign Minister, Khaled Kaaim.

Tripoli also rejects Russian mediation and will “not accept any mediation which marginalises the peace plan of the African Union”, he said. “We are an African country. Any initiative outside the AU framework will be rejected.”

In the meantime, Nato yesterday accused forces loyal to Col Gaddafi of laying landmines around the rebel-held city of Misurata to prevent the population from moving.

The mining of Misurata’s surrounding area is part of the regime’s efforts to take back the key western port after rebels routed them from the city earlier this month, said the commander of the Nato mission in Libya, Lieutenant General Charles Bouchard.

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