The missile launched during operations by the US and European forces to patrol the no-fly zone destroyed what one coalition official described today as Gaddafi's "command and control capability" inside the Libyan leader's compound at Bab el-Aziziya in south of capital Tripoli.
It was unclear where Gaddafi(68) was at the time of the strike on his air defences as part of a renewed allied assault on Libya involving British submarines and RAF Tornado jets.
US Defence Secretary Robert Gates said the US expects to turn control of the Libya military mission over to a coalition probably headed either by the French and British or by NATO "in a matter of days."
The three-storey administrative building which was flattened is about 50 metres from Gaddafi's iconic tent where the Libyan strongman generally meets guests in Tripoli. It was hit by a missile, Libyan government spokesman Moussa Ibrahim told reporters who were taken to the site by bus.
"This was a barbaric bombing which could have hit hundreds of civilians gathered at the residence of Muammar Gaddafi about 400 metres away from the building which was hit," Ibrahim said.
Smoke was seen rising from within the heavily fortified compound which houses Gaddafi's private quarters as well as military barracks and other installations. A Libyan official displayed to reporters a piece of shrapnel, apparently from the missile, at the ruined building.
Pentagon spokesman Vice-Admiral William Gortney at a news briefing at Washington said, "We are not going after Gaddafi. At this particular point I can guarantee he is not on the target list."
Gortney also said it had no evidence of civilian casualties in airstrikes by coalition forces over Libya.
"There is no indication of any civilian casualties," he insisted in comments that came after Tripoli's official media said the airstrikes were targeting civilian objectives and that that there were "civilians casualties as a result of this aggression."
In contrast to US position, British Defence Secretary Liam Fox suggested that Gaddafi was a legitimate target, so long as steps were taken to avoid harm to civilians around him.
Asked about Fox's remarks, Gates said it would be "unwise" to have coalition forces try to kill Gaddafi in military strikes in Libya and that the allied operation should stick to the parameters as authorized by UN Security Council.
"I think that it's important that we operate within the mandate of the UN Security Council resolution," he said.
There were also signs of unease in the Arab world over the scale and nature of the attacks.
"What has happened in Libya differs from the goal of imposing a no-fly zone, " the Arab League's secretary general Amr Mussa said.
"What we want is the protection of civilians and not bombing other civilians," Mussa said.
Asked about criticism about the air strikes from the Mussa, Gates said he was reassured by renewed support for the operation by the bloc.
Gates said governments were discussing how best to organize the military command of the operation, with Arab states reluctant to have a NATO flag over the intervention.
Gates, who was speaking on a US military plane en route to Russia, said the intervention was backed by "a very diverse coalition" and warned that expanding its goals could complicate the consensus around the UN resolution.
"If we start adding additional objectives then I think we create a problem in that respect," he said. "I also think it's unwise to set as specific goals things that you may or may not be able to achieve."
Initially, the goal was to shut down Gaddafi's air force to safeguard civilians, he said.
"The key is to first of all, establish the no-fly zone, to prevent him from using his military forces to slaughter his own people," he said.
Gates also said that the US expects to turn control of the Libya military mission over to a coalition probably headed either by the French and British or by NATO "in a matter of days."
In his first public remarks since the start of the bombings, Gates said President Barack Obama felt very strongly about limiting America's role in the operation, adding that the president is "more aware than almost anybody of the stress on the military."
"We agreed to use our unique capabilities and the breadth of those capabilities at the front of this process, and then we expected in a matter of days to be able to turn over the primary responsibility to others," Gates said. "We will continue to support the coalition, we will be a member of the coalition, we will have a military role in the coalition, but we will not have the preeminent role."
Gates' comments came as American ships and aircraft continued to pound Libya, taking out key radar, communications and surface-to-air missile sites along its Mediterranean coast. Even as his military was under siege, Gaddafi has vowed to endure through a long war against what he called colonial crusader aggression by the international coalition.