Liam Fox spoke to the BBC after the assassination of rebel military chief Gen. Abdel Fattah Younis, which the Benghazi authorities blame on members of the Obaida ibn Jarrah Brigade, an Islamic radical group. Younis, a right-hand man to Gadhafi for decades, defected in February.
"We've known from history that there have been radical elements there," Fox said. "The aim will have to be as we move into the development phase and we go into the growing of the democracy in Libya, to ensure that these people are marginalized -- but to pretend they're not there would be unrealistic."
Britain last week officially recognized the rebel government in the eastern city of Benghazi.
"There's only one message we should be sending to the regime," Fox said, "and that is that we have both the military capability and the resolve to continue pursuing and fulfilling United Nations resolution 1973 as long as is required.
"The key to the Libyan resolution will be whether or not the close circle around Col. Gadhafi recognize … that he will sooner or later have to leave power."