Libya's incoming prime minister Abdurrahim El-Keib was forced on Wednesday to pacify an angry crowd of armed fighters demanding jobs and back-pay, and urged his Western allies to unblock frozen funds so his government can pay its way.

After coolly charming the dozens of gun-toting former rebels picketing the Finance Ministry, the U.S.-trained academic plucked from obscurity to form a cabinet, told Reuters he needed billions of dollars Muammar Gaddafi had parked in foreign accounts and which have been frozen by international sanctions.

What this country needs to take care of the security situation is resources, Keib said in some of his first comments to international media since being elected last week by the National Transitional Council (NTC) whose forces overthrew Gaddafi in August and captured and killed him two weeks ago.

They are our resources in fact, he added. We are not begging for a loan.

An engineering professor who returned this year to support the Western-backed uprising after a long career in the United States, Keib has pledged to take two weeks to form a government that can rally support from disparate local factions that fought Gaddafi. Thousands of their fighters are still camped around the capital, staking claims to a share of power, jobs and budgets.

Western governments have released several billion dollars of Gaddafi's frozen assets to meet urgent humanitarian needs in Libya, but the bulk of an estimated $150 billion in funds accrued largely from oil exports remains blocked.

All but unknown until last week, the softly spoken academic secured a warm reception from the armed demonstrators when he promised something for everyone under the new democracy - though he also injected a note of cautious reality: I don't have Moses' staff, and I won't create miracles, he said after wading into the crowd and shaking hands like a seasoned politician.

GUNS AND ANGER

Some of those who had marched up to the gates of the Finance Ministry compound in Tripoli while Keib was holding meetings inside brandished their Kalashnikov rifles. Others were limping and many had bandages on their faces and casts on their arms.

No, no, no! Not like Gaddafi, no! chanted the group, most of whom were dressed in a motley assortment of army fatigues.

The government should form an army and we want to be part of it, said one of the men, Mohammed Shaaban. We brought the revolution and we want to be part of the future of the country.

Like many of the popular bands which took on Gaddafi's army and, with NATO help, ended his 42 years in power, the group was drawn from one small neighbourhood in Tripoli and had given itself the military-sounding name, the Red Headquarters Brigade.

There is no order, shouted another of the fighters over a megaphone. The government doesn't know what it's doing.

While few of the students and tradesmen and other civilians who took up arms did so for money, the lack of resources after eight months of war is a vexed question for many. A rumour that other groups, some supported by wealthy businessmen or political movements, received cash for this week's Muslim holiday of Eid al-Adha had stirred a sense of grievance among those protesting.

Keib sought to calm their anger, letting the demonstrators in to the courtyard of the ministry and stepping out among them.

While reminding them of the government's limited resources, he said: There will be programmes to include all the revolutionaries, whether in the national security force or in the national army, or civil society institutions.

There will be programmes to include everyone.

MAKE THEM FEEL IMPORTANT

He then took questions from the fighters, and responded to them individually, his years of speaking from university lecture podiums from Alabama to Abu Dhabi standing him in good stead.

Slowly, and clearly feeling reassured by what they heard, the crowd dispersed and the fighters returned home.

It was a rare early glimpse of how Keib may operate as prime minister of a country that is reeling from a year of bloodshed.

Now Keib, 61, who was raised in Tripoli, has the tough job of forming a government to unite the nation of six million, before elections can be held in mid-2012 for a National Council which will draft a new constitution.

Speaking after the protest, he told Reuters he was focussing on ways to find gainful peacetime employment for former rebel fighters, whose presence on the streets has raised concerns for Libya's future if the new administration does not satisfy them.

It is not an issue of just saying 'OK, just give us your gun, go home.' This is not the approach we take, he said.

We will look at the issues, evaluate and come up with programmes to take care of them and help them and make them feel important.

(Additional reporting by Omar Younis; Editing by Alastair Macdonald and Jon Hemming)