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Rebels have made dramatic advances in the Libyan capital Tripoli, after six months of fighting and look set to take power.
Prime Minister John Key yesterday said New Zealand would recognise the rebel's governing body the National Transitional Council (NTC) and David Strachan, New Zealand ambassador in Cairo, was preparing to travel to Benghazi to meet its members.
Mr McCully said it was clear the rebels would defeat dictator Muammar Gaddafi, but that would take a bit longer.
"I think that it's fair to say the outcome is now clear and it would be I think on everyone's mind that we would should try and see the obvious conclusion now arrived at without any further bloodshed," he told Radio New Zealand.
Moves to engage with the NTC started a month ago.
"It was clear to us that we should start a process of engagement with the NTC and at that stage I asked our ambassador to make arrangements to go to Benghazi and open up a more formal dialogue with the authorities.
"He's been in touch with them directly in Benghazi but also through their ambassador in Cairo, where our embassy is based."
Mr Strachan would visit the week after next so as not to clash with religious festival Ramadan.
New Zealand had previously offered support for Libyans displaced by the conflict.
"And in the last day or so I've been discussing with the ambassador whether we might make a further contribution as part of his visit to Benghazi.
"Clearly there are going to be some priority areas, one of them appears to be in the area of providing health care to people who have suffered significantly in recent weeks but we will take that step by step.
"Right now we are just watching the situation unfold and hoping that we will see this thing bought to its natural conclusion without too much further bloodshed."
Mr McCully welcomed NTC calls for restraint.
"Its pleasing and very welcome to see that the head of the NTC is calling for restraint, calling for the rule of law to be applied and I think that these are encouraging signs from the emerging authorities in Tripoli."
Several New Zealanders chose to remain in Libya but have not sought assistance.