Venezuelan’s foreign minister, Nicolas Maduro, discussed the offer with the head of the Arab League, Amr Moussa, Al-Jazeera correspondent in Caracas said, adding that details of the plan could be announced at an Arab League meeting in Cairo on Thursday.
The plan would involve a commission from Latin America, Europe and the Middle East trying to reach a negotiated outcome between the Libyan leader and opposition forces which have seized control of large areas of the North African oil-producing country, Al-Jazeera said.
A day earlier, officials in Venezuela said that both Gaddafi and Chavez plans for an international peacekeeping mission to mediate the crisis in Libya.
"We do confirm that Commandant Chavez had a conversation with Kadhafi yesterday (Tuesday) on a Peace Commission for Libya proposal," Communications Minister Andres Izarra tweeted.
For his part, Moussa confirmed on Thursday that a Venezuelan peace plan is "under consideration".
"We have been informed of President Chavez's plan but it is still under consideration," he told the Reuters news agency on Thursday. "We consulted several leaders yesterday."
In a resolution issued Wednesday, the Arab League called on the Libyan government to respond to the "legitimate demands of the Libyan people" and to stop the bloodshed in the country. Libya's membership of the organization has been suspended in protest at the crackdown by pro-Gadaffi forces.
It also said it could impose a no-fly zone in co-ordination with the African Union in fighting continues. But it has rejected calls for direct outside military intervention in Libya.
GADDAFIS WARNS OF BLOODBATH IF WEST INTERVENES
Also on Wednesday, Gaddafi warned "thousands" would die if the West launched a military intervention in Libya.
Speaking live on state television, Gaddafi warned that the "battle will be very, very long" if there is any intervention by foreign powers.
"If the Americans or the West want to enter Libya they must know it will be hell and a bloodbath -- worse than Iraq."
In an impassioned speech, he again blamed Al-Qaeda for the challenge to his 41-year iron-fisted rule, saying the objective was to control Libya's land and oil.
As the world clamored for action to stop Kadhafi using warplanes against his own people and to protect refugees scrambling to escape, the United States and its allies cooled talk of imposing a no-fly zone over his country.
US Secretary of State Hillary Clinton said any such decision was a "long way" off, and NATO officials remained divided.
Clinton also warned that any intervention would be "controversial" in the Arab world and that the Libyan opposition wanted to be seen to be dislodging Gaddafi’s forces on their own.
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