BENGHAZI, Libya (Reuters) - Libya's new rulers declared the country freed from Muammar Gaddafi's 42 years of one-man rule on Sunday, saying the "Pharaoh of the times" was now in history's garbage bin and a future of democracy and postwar reconciliation beckoned.
But as thousands gathered in the second city Benghazi to hear authorities announce "liberation", Gaddafi's rotting body remained unburied and on show to locals wearing masks against the stench in a cold store in Misrata, a situation that may vex some Muslims for whom rapid burial of the dead is a duty.
There was no direct reference to what some outsiders saw as Misrata's ghoulish display in a speech by National Transitional Council (NTC) chief Mustafa Abdel Jalil, who kneeled in prayer after taking the podium in Benghazi.
He renewed an earlier promise to uphold Islamic law.
"All the martyrs, the civilians and the army had waited for this moment. But now they are in the best of places ... eternal heaven," he said, shaking hands with supporters.
Some fear Jalil, a mild-mannered former justice minister, will find it hard to impose his will on his fractious revolutionary alliance, pointing to Misrata's insistence on displaying Gaddafi's body and that of his son Mo'tassim and to the lack of a clear account about how they met their end.
There is international disquiet about increasingly graphic and disturbing images on the Internet of abuse of a body that appears to be Gaddafi's following his capture and the fall of his hometown of Sirte on Thursday.
But the immediate reaction to Sunday's announcement was jubilation.
"We are the Libyans. We have shown you who we are Gaddafi, you Pharaoh of the times. You have fallen into the garbage bin of history," said lawyer Abdel Rahman el-Qeesy, who announced the creation of a new government portfolio to deal with victims of the conflict.
"We declare to the whole world that we have liberated our beloved country, with its cities, villages, hilltops, mountains, deserts and skies," said an official who opened the ceremony in Benghazi, the place where the uprising erupted in February and which has been the headquarters for the NTC.
Cheering crowds waved the tri-colour flag.
Gaddafi, who had vowed to fight to the end, was found hiding in a drain after fleeing Sirte, the last bastion of his loyalists. He died in chaotic circumstances after video footage showed him bloodied and struggling at the hands of his captors.
With big oil and gas reserves and a six million population, Libya has the potential to become very prosperous, but regional rivalries fostered by Gaddafi could erupt into yet more violence that would undermine the authority of Jalil's NTC.
"There is a yawning security and political vacuum in which brewing political disputes, factionalism and security problems pose a serious risk of derailing or prolonging transition," said Henry Wilkinson of Janusian security consultants in London.
In Misrata, people queueing for a chance to see Gaddafi's body saw no reason for a rapid burial, apparently heedless of concern in Tripoli about how the NTC is perceived overseas.
"We brought our children to see him today because this is a chance to see history," said a man who gave his name as Mohammed. "We want to see this arrogant person as a lifeless body. Let all the people see him."
The declaration of liberation is intended to set the clock ticking on a process to set up a multiparty democracy, a system Gaddafi railed against for most of his 42 years in power.
In 2007 Gaddafi, whose "state of the masses" was seen by many Libyans as despotism, called democracy a sham in which people were "ridden like donkeys" by powerful interests.
Some analysts fear that without strong leadership the revolution could now collapse into armed infighting, preventing the country from ever attempting the novelty of the ballot box.
The lack of a clear plan for Gaddafi's burial suggests to some analysts that there is justification for fears of a descent into leaderless turmoil.
An autopsy has been performed, and a medical source told Reuters that Gaddafi's body had a bullet in the head and a bullet in the abdomen.
"There are multiple injuries. There is a bullet in the abdomen and in the brain," the medical source said.
The autopsy was carried out at a morgue in Misrata, about 200 km (130 miles) east of Tripoli. Local officials said Gaddafi's body would now be brought back to the cold store at an old market in Misrata where it has been on public display.
The loosely disciplined militias that sprang up in each town to topple the dictator with the help of NATO air power are still armed. The places they represent will want a greater say in the country's future, particularly the second and third cities Benghazi and Misrata, which were starved of investment by Gaddafi.
It was fighters from Misrata who emerged from a lengthy and bloody siege to play a large part in taking Tripoli and later caught Gaddafi.
British Foreign Secretary (Minister) William Hague and NATO Secretary-General Anders Fogh Rasmussen issued separate calls for Libyans to avoid retribution and reprisals and seize a chance to build pluralism and the rule of law.
U.S. Secretary of State Hillary Clinton, speaking on the NBC program "Meet the Press", said she would strongly support both a U.N. and an NTC investigation into Gaddafi's death.
"Stand for unity and reconciliation, make it absolutely clear that everyone who stood with the old regime, as long as they don't have blood on their hands should be safe and included in a new Libya," she said.
There is some unease abroad over what many believe was a summary execution of Gaddafi. U.N. Human Rights Commissioner Navi Pillay has called for an investigation into the killing, but few Libyans share those concerns.
Gaddafi's surviving family, in exile, wants his body and that of his son Mo'tassim to be handed over to tribal kinsmen from Sirte. NTC officials said they were trying to arrange a secret resting place to avoid loyalist supporters making it a shrine. Misrata does not want his body under its soil.
But a field commander in Misrata worried that trouble was brewing.
"The fear now is what is going to happen next," he said, speaking to Reuters privately, as ordinary Libyans, some taking pictures for family albums, filed in under armed guard to see for themselves that the man they feared was truly dead.
"There is going to be regional in-fighting. You have Zintan and Misrata on one side and then Benghazi and the east," the guerrilla said. "There is in-fighting even inside the army."
The announcement of "liberation" sets a clock ticking on a plan for a new government and constitutional assembly leading to full democracy in 2013.
"We hope we will have an elected democratic government with broad participation," student Ali Abu Shufa said.
Gaddafi promoted tribalism to keep the country divided, he said. "But now Gaddafi is dead, all the tribes will be united."
Additional reporting by Taha Zargoun in Sirte, Barry Malone and Jessica Donati in Tripoli, Rania El Gamal and Tim Gaynor in Misrata, Christian Lowe and Andrew Hammond in Tunis, Samia Nakhoul in Amman and Tom Pfeiffer at the Dead Sea, Jordan; Writing by Jon Hemming and William Maclean; Editing by Andrew Roche