He appealed to Gadhafi to prevent further bloodshed, and urged opposition forces to build a democratic government through "peaceful, inclusive and just" measures.
In his first appearance since a weekend push by the rebels into the Libyan capital, Obama said fierce fighting rages in some areas of the capital city of Tripoli.
"But this much is clear. The Gadhafi regime is coming to an end, and the future of Libya is in the hands of its people."
Obama made his comments on the grounds of a vacation property where he is staying on Martha's Vineyard off the Massachusetts coast.
Half a world away, rebels claimed control of most of Tripoli, including state-run television. At least two of Gadhafi's sons were in custody, but the ruler's whereabouts were unknown after nearly 42 years in power.
In his remarks, Obama said the popular uprising against Gadhafi "echoed the voices we had heard all across the region," from Tunis to Cairo, the capitals of two other Arab countries that forced autocratic rulers from power this year. The president made no mention of Syria, where the government has launched a crackdown against protesters in recent weeks that has resulted in the reported deaths of thousands.
The apparent end was coming to the Libyan regime about five months after an air campaign launched by the United States and NATO began targeting Gadhafi's forces.
"In the early days, the United States provided the bulk of the fire power and then our friends stepped forward," Obama said.
He added that Gadhafi was "cut off from arms and cash and his forces were steadily degraded....Over the last several days the situation in Libya has reached a tipping point," he said, and "the people of Tripoli rose up to claim their liberties."
The president provided no information about efforts to locate Gadhafi, although White House and Pentagon officials said earlier they believe he's still in the country.
Obama received an update earlier in the day from John Brennan, his deputy national security adviser.
Already, the White House was claiming success for the administration's policy, which has drawn criticism as the NATO-led operation stretched on far longer than had initially appeared likely.
Asked whether the rebel advances were a vindication of Obama's strategy to let NATO take the lead in Libya, spokesman Josh Earnest said he would not "assess winners and losers," but said Obama's approach "has yielded a lot of favorable results here."
He said the administration had no intention of changing its policy of keeping U.S. troops out of Libya.
Secretary of State Hillary Rodham Clinton telephoned the leader of the Libyan Transitional National Council on Monday, and also spoke to leaders of several nations who are part of an international diplomatic effort known as the Libya Contact Group. That body could meet as soon as next week in Europe.
A State spokesman said Monday that no decision has yet been made on whether to send U.S. military and diplomatic weapons experts to Libya to help prevent the Gadhafi regime's massive arsenal of anti-aircraft missiles from slipping into the hands of terror groups.
Military officials estimate the regime amassed as many as 30,000 Man-Portable Air Defense Systems, or MANPADS, before the fighting began. Most are believed to be early-model Russian missiles and launchers.
The U.S. has already sent an interagency team to the region to confer with Libya's neighbors and is providing $3 million to two international weapons abatement teams to locate and dispose of the weapons.
Some missiles have been dismantled, but officials in Algeria and several other nations have raised alarms that other plundered weapons have reached al-Qaeda's North African branch.
The Pentagon has provided well over 60 percent to 70 percent of the intelligence flights in support of NATO operations involving Libya. The U.S. led airstrikes before turning the mission over to NATO forces.
Obama spoke one day after issuing a written statement that said the situation in Libya had reached a "tipping point" and control of the capital was "slipping from the grasp of a tyrant."
Opposition fighters captured his son and one-time heir apparent, Seif al-Islam, who along with his father faces charges of crimes against humanity at the International Criminal Court in the Netherlands. Another son was in contact with rebels about surrendering, the opposition said.
The United States has joined other countries in recognizing the Transitional National Council as the legitimate government in Libya.
In his remarks before television cameras, Obama said that as the post-Gadhafi era begins, "the rights of all Libyans must be respected. True justice will not come from reprisals and violence, it will come from reconciliation."
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Associated Press writers Mark S. Smith and Erica Werner in Vineyard Haven, Mass., and Matthew Lee, Lolita C. Baldor, Pauline Jelinek, Stephen Braun and Julie Pace in Washington contributed to this report.
