Libya's army announced a ceasefire Sunday, joining an Islamist-backed militia alliance in declaring a truce that the UN hailed as a "significant" step towards ending months of violence.

"We declare a ceasefire from midnight (2200 GMT) Sunday," the army said, stressing however that it would continue to pursue "terrorists", as UN-brokered peace talks resume in Geneva next week.

The army also said it would monitor the situation on the ground "to prevent any change in front lines or transportation of weapons and ammunition," which it would consider a violation of the truce.

Soldiers "have been given the right to defend themselves if they come under fire," the statement added.

The UN's Libya mission welcomed the ceasefire as a "significant contribution" to the country's peace process.

Libyan armed forces spokesman Colonel Ahmed Mesmari said the army was "engaged in pursuing its duty to protect the Libyan people".

He said the military would "ensure the security and stability of the country and combat terrorism" in Libya.

On Friday, the Fajr Libya (Libya Dawn) militia alliance said it had agreed to a ceasefire in the North African country on the condition rival factions respected the truce.

It also pledged to open up "safe passages to channel humanitarian aid", especially in Libya's battleground second city of Benghazi.

Fajr Libya did not take part in a first round of UN-brokered peace talks in Geneva last week, during which Libya's opposing factions agreed on a roadmap to form a unity government and to further discussions.

The army's announcement came after the UN Security Council welcomed the Fajr Libya ceasefire and threatened to impose sanctions on any party that obstructed peace efforts.

"There can be no military solution to the crisis in Libya," the council said in a unanimous statement on Saturday.

It warned it was "prepared to sanction those who threaten Libya's peace, stability or security or that obstruct or undermine the successful completion of its political transition."

Libya has been sliding deeper into conflict since the 2011 overthrow of Moamer Kadhafi, with rival governments and powerful militias battling for control of its main cities and oil wealth.

The internationally-recognised government and elected parliament decamped last summer to the country's far east after Fajr Libya seized Tripoli and set up its own administration.

The militia alliance also holds the third city, Misrata, and it launched a bloody offensive in December to seize control of key oil terminals but was repelled by the army.

The UN special envoy to Libya, Bernardino Leon, had warned at the start of the Geneva talks last week that they were a last-ditch effort to prevent all-out chaos.

Leon also underscored the threat of Libya becoming a hotbed of Islamist insurgency.