TRIPOLI: Western Libya's main refinery resumed operations on Friday after protesters shut it down for a day, a spokesman said.

Essam al-Muntasir of the Zawiya Oil Refining Company said employees were able to resume work and fuel trucks were able to leave the refinery.

"Employees have gone back inside the refinery and are beginning the process of starting up the machinery," he said. "Fuel tanks are also able to enter and exit the refinery to transport fuel."

A large crowd of war veterans demanding government compensation prevented employees from entering the refinery on Thursday and fuel tanks from leaving.

Muntasir said the demonstrators were wounded veterans demanding to be sent abroad for treatment.

A similar protest in early November forced the refinery to shut down for two days, hitting fuel supplies in the capital.

Panicking Tripoli residents formed long queues at petrol stations to fill up their tanks on Wednesday night after hearing the news of the latest protest.

A number of protests outside refineries have posed a significant challenge to Libya's new government, which is dependent on oil for most of its revenue.

The administration is still struggling to impose order on a vast and divided country awash with arms and militias after the overthrow of Muammar Gaddafi last year.

Muntasir said the veterans were persuaded to end their protest after members of the ruling national assembly and Zawiya's local council intervened.

He refused to say what guarantees if any had been given to the refinery to prevent further disruption.

"We are working on a solution with Zawiya security, but cannot give details at the moment," he said.

The Zawiya refinery, about 50 km (30 miles) west of Tripoli, has a capacity of 120,000 barrels per day and provides 40 per cent of western Libya's oil needs.