Koussa arrived from Tunisia at Farnborough Airport, about 35 miles (55 kilometers) southwest of London, the Foreign Office said in a statement, adding that he traveled to Britain under his own free will.
"He has told us that he is resigning his post," the statement said. "We are discussing this with him and we will release further details in due course."
Moussa Ibrahim, a Libyan government spokesman, denied that the foreign minister has defected saying he was in London on a "diplomatic mission."
"He is on a diplomatic mission. He has not defected," Ibrahim told reporters in the Libyan capital, Tripoli.
It was not immediately possible to confirm either statement with Koussa or people close to him.
Libya's justice and interior ministers resigned early in the conflict and joined the rebels fighting in the east.
If Koussa's resignation is confirmed, however, it would be the first high-profile resignation since the U.S.-led airstrikes on Libyan forces began and would deal a major blow to Gadhafi's inner circle. With strong support from Britain, France and other countries, the military intervention has U.N. Security Council backing in a bid to prevent Gadhafi's forces from attacking civilians.
There have been several shifts of momentum on the battlefield, with the rebel forces suffering setbacks Wednesday after gaining ground the day before, as Western countries try to find a way to oust Libya's leader.
British officials urged Gadhafi's other supporters to desert him.
"We encourage those around Gadhafi to abandon him and embrace a better future for Libya that allows political transition and real reform that meets the aspirations of the Libyan people," the Foreign Office statement said, indicating that discussions with Koussa would be ongoing.
A U.S. official who is not authorized to speak publicly said the U.S. was trying to confirm that Koussa had defected but had no reason to doubt the British statement.
"If this is true we would welcome it and we would encourage others to follow and heed the calls of the Libyan people for their aspirations to be met," the official said.
Guma El-Gamaty, an organizer in Britain for a leading Libyan opposition group, said Koussa's action would be "a big hit" that would weaken Gadhafi.
"He says he is resigning," El-Gamaty said. "That means he is defecting. He has been Gadhafi's right-hand man for years, running intelligence, running the Lockerbie bomber negotiations, running many things."
El-Gamaty said he does not think Koussa is likely to remain in Britain but would probably end up in another country in an effort to avoid possible prosecution.
He said that Koussa would not be welcomed into the opposition movement because of his prior actions on behalf of the Gadhafi government.
Koussa's unannounced arrival in Britain followed hours of unconfirmed reports about his travel plans. Tunisia's official news agency had reported that he had arrived in Tunisia Monday for a "private" visit, without elaborating.
A Tunisian diplomatic official, who spoke on condition of anonymity, told the Associated Press that Koussa had met a "foreign delegation" at his hotel in Djerba.
The agency's report Wednesday said he had been accompanied by Libya's vice-minister for European affairs, Abdelati Laabidi, who returned to Libya.
Koussa was reported to be carrying a diplomatic passport.
Hadeel al-Shalchi in Tripoli, Libya, Bouazza Ben Bouazza in Tunis, Tunisia and Matthew Lee in Washington contributed to this report.