Gaddafi made the comments on Sunday, Aug 29, during a lecture to a group of 500 young women hired and paid by an agency to attend his lecture.
"Islam should become the religion of all of Europe," one of the women quoted Gaddafi as saying in the Italian press.
The agency paid the women, mainly students who hire themselves out for advertising of publicity events, 70 or 80 euros (90 or 100 dollars) to attend and said it would not pay girls who gave their names to the press.
"Islam is the last religion and if we are to have a single faith then it has to be in Mohammed," he said, according to the participant.
However, Carlo Giovanardi, a government undersecretary, tried to stem the criticism, saying Gaddafi's words were simply "a remark made during a private meeting."