The UN is withdrawing all its international staff from the Libyan capital Tripoli following a mob attack on its offices.
The villa in Col Gaddafi's compound was severely damaged in the strike
UN buildings and some foreign missions were targeted by angry crowds following a Nato air strike that reportedly killed a son of Col Gaddafi.
A UN official told the BBC its staff would withdraw from Libya and the decision would be reviewed next week.
The UK expelled the Libyan ambassador after its premises were attacked.
UK Foreign Secretary William Hague said ambassador Omar Jelban was "persona non grata" and had been given 24 hours to leave the country.
By not protecting diplomatic missions, the Gaddafi regime had "once again breached its international responsibilities and obligations", said Mr Hague.
He added: "The attacks against diplomatic missions will not weaken our resolve to protect the civilian population in Libya."
The Italian foreign ministry has condemned the "acts of vandalism" on its embassy, describing them as "grave and vile". Italy - which closed its embassy in March and is represented by Turkey - recently joined the Nato mission in Libya.
There were also protests outside the US mission in Tripoli.
A UN official, who confirmed that its offices had been ransacked overnight, said the Libyan government had apologised, blaming an angry mob for the damage.
Most Western governments evacuated staff from Tripoli when an international coalition began air strikes on Libya several weeks ago.
Late on Saturday, the Libyan government said Saif al-Arab Gaddafi and three of Col Gaddafi's grandchildren had died in a Nato attack on a villa in Tripoli.
Foreign reporters were shown widespread damage to the building in Col Gaddafi's Bab al-Aziziya compound.
Nato has insisted its raid targeted a "command-and-control" building, and that all Nato targets were "military in nature".
Libyan government spokesman Moussa Ibrahim said Col Gaddafi and his wife had been in the building at the time of the attack but they were both unharmed.
He said the air strike was against international law and "a direct operation to assassinate the leader of this country".
Nato is operating in Libya under a strict UN mandate to protect civilians.
"How is this helping in the protection of civilians? Mr Saif al-Arab was a civilian, a student," Mr Ibrahim said.
"He was playing and talking to his father and mother and his nieces and nephews and other visitors when he was attacked and killed."
The BBC's Christian Fraser witnessed the damage and said that if Col Gaddafi had been there, it is hard to imagine he could have walked away from the scene unscathed.
Russia expressed "serious doubts" that the West was not targeting Col Gaddafi and his family.
"The claims of the coalition members that strikes over Libya do not have the physical destruction of Muammar Gaddafi and members of his family as their goal cause serious doubts," a statement from the foreign ministry said.
"Reports of casualties among civilians are being received in Moscow with increasing concern," it added.
In the eastern rebel stronghold of Benghazi, shots were fired in celebration following the reports that Saif al-Arab Gaddafi had been killed.
On Saturday, Nato officials said the alliance would not consider talks until government forces stopped attacks on civilians.
The vice-chairman of the rebel Transitional National Council also rejected the offer of negotiations.
He said the Libyan leader had "offered ceasefires only to continue violating basic human rights".
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