Pressed by Western powers, notably the United States and Italy, to take the helm as swiftly as possible, ambassadors from the 28-nation alliance approved the transfer after overcoming French and Turkish concerns.
"Our goal is to protect civilians and civilian-populated areas under threat of attack from the Gaddafi regime," said NATO Secretary General Anders Fogh Rasmussen.
"NATO will implement all aspects of the UN Resolution. Nothing more, nothing less," he said.
Rasmussen said operational commander for Operation Unified Protector, Lieutenant-General Charles Bouchard of Canada, was instructed to "begin executing this operation with immediate effect."
NATO officials cautioned however that the transfer would take some 48 to 72 hours, meaning the coalition will co-exist with NATO's operation for another two or three days.
Meeting concerns raised by Turkey, envoys from NATO's 28 member states endorsed a three-month plan agreed by its military authorities, including rules of engagement strictly limiting the use of ground strikes to protect civilians and populated areas, diplomats said.
The plan does not call for NATO to intervene in support of the armed rebellion fighting Gaddafi, the diplomats said.
"NATO will always remain impartial. NATO does not take sides," said a NATO diplomat who asked not to be identified.
The transatlantic organisation is already running naval operations to prevent weapons and mercenaries from entering Libya, and agreed to enforce a no-fly zone to prevent Kadhafi''s jets from flying.
Under today's agreement, NATO's role is broadened to strike ground assets such as tanks or artillery, in the case civilian lives are in danger.
In a landmark resolution a little over a week ago, the United Nations approved "all necessary measures" to safeguard civilians under threat of attack.
Turkey, NATO''s sole predominantly Muslim member, had criticised the scope of Western-led air strikes launched over the past week. With decisions taken by unanimous vote at NATO, "the rules of engagement will take into account the sensitivities of all NATO members, including Turkey," an alliance diplomat said.
Bouchard, from his headquarters in Naples, Italy, will thus scramble jets across the Mediterranean to strike at Gaddafi tanks and troops only to save civilian lives - enforcing a "no-drive zone" - or in self-defence.
From the outset, the international coalition launched by Britain and France levered for support from Arab and African states as regional power Turkey vowed to "never point a gun at the Libyan people".