World leaders urged Libya's warring parties yesterday to sign a proposed peace deal installing a national unity government, after a cool response from some lawmakers in the country's rival parliaments.

Libya has had two administrations since August last year when a militia alliance that includes Islamists overran the capital, forcing the internationally recognised government to take refuge in the east.

The country descended into chaos after the fall of Moamer Gaddafi in 2011, with the two sides vying for power as well as several groups battling for control of its vast resource wealth.

The new government proposed by UN envoy Bernardino Leon would be headed by Fayez el-Sarraj, a deputy in the Tripoli parliament, and include three deputy prime ministers, one each from the west, east and south of the country.

A graduate in business management, Sarraj has been involved in dialogue that tried to bring together the various actors of Libyan society to end the crisis.

"After a year of work in this process, after working with more than 150 Libyan personalities from all the regions... finally the moment has come in which we can propose a national unity government," Leon told a news conference in Morocco.

UN chief Ban Ki-moon welcomed the news, and appealed to warring factions to sign the accord.