UPDATE 2-Libyan government concedes to restive town's demands
* Defence minister agrees to tribal-based local government
* Locals complain of harassment, say not pro-Gaddafi
* NTC militias said to be on outskirts (Adds elders, defence ministry comments)
TRIPOLI, Jan 25 (Reuters) - Libya recognised a tribal-based local government in the former Gaddafi stronghold of Bani Walid on Wednesday, illustrating the power of tribal leaders over the fragile interim government.
Fighters from the Warfallah tribe -- the dominant tribe in Bani Walid and the most populous in Libya -- drove out a pro-government militia from the town this week.
Salah al-Maayuf, a member of the Warfallah Elders Council in Bani Walid, said his tribal body appointed a new local council on Tuesday and that Defence Minister Osama al-Juwali recognised the body during all-day talks on Wednesday.
"The defence minister told us that if we, as a tribe, believe that the new local council in Bani Walid will work, then we have convinced him that it can," Maayuf told Reuters from Bani Walid, a bastion of support for former leader Muammar Gaddafi during last year's rebellion.
"We told him that we want to keep the whole country peaceful and that national unity was a priority," Maayuf added.
An official at the defence ministry confirmed that Juwali had accepted the new council, but did not give further details. Continued...