The Daily Telegraph quoted the official, who was not named, as saying "more member states, including the most hard-line, are more flexible than before on the problem" in a bid to help mediation efforts in Tripoli by Abdel Elah al-Khatib, a United Nations special representative.
A British diplomat said rebel leaders in Benghazi were being encouraged to negotiate with Gadhafi regime figures who "do not have blood on their hands." Rebels have refused to talk until the dictator resigns.
"As long as there is a cease-fire leading to a transition from Colonel Gadhafi, we believe that talks could take place without Colonel Gadhafi leaving, though he could not have power over the negotiations," a British official said. "It needs a clear vision of a political process that leads to the demise of the regime."
The stand represents a change from earlier demands that Gadhafi go immediately.
Khatib was reported to be discussing an eventual transfer of power following an immediate cease-fire.