In the latest effort to pressure Muammar al-Qaddafi to step down as leader of Libya, the United States and other nations on Friday declared his regime no longer legitimate and formally recognized the North African country's main opposition group as the government.

The move possibly allows the U.S. to fund the rebels with the more than $30 billion in Libyan assets that are frozen in American banks. The rebels -- known as the Transitional National Council, or TNC -- desperately need that money to buy everything from communications gear to food to gas to ammunition and new weapons for their ongoing war effort.

"The United States views the Qaddafi regime as no longer having any legitimate authority in Libya," said U.S. Secretary of State Hillary Clinton, speaking in Istanbul, Turkey, at the Intervention at Libya Contact Group Meeting. "And so I am announcing today that, until an interim authority is in place, the United States will recognize the TNC as the legitimate governing authority for Libya, and we will deal with it on that basis."

She added that the people of Libya are already looking past Qaddafi.

"They know, as we all know, that is no longer a question of whether Qaddafi will leave,but when," she said.

The move earned praise from several U.S. senators.

"This is an encouraging step, which demonstrates America's commitment to support the Libyan people as they fight to liberate their country from the Qaddafi regime and establish democracy," U.S. Sens. John McCain, R-Ariz., Joe Lieberman, I-Conn., Lindsey Graham, R-S.C., and Marco Rubio, R-Fla., said in a statement.

The group said recognition should free up frozen assets of the Qaddafi regime to support the Libyan people and the NATO mission. "We also urge the administration to increase our diplomatic presence in Benghazi, designate a U.S. ambassador to the TNC and give the TNC's representatives in Washington and New York full diplomatic rights and privileges," they said.

But an undeterred Qaddafi urged his loyalists to take up arms to attack Libya's enemies.

"Trample on those recognitions, trample on them under your feet ... They are worthless," he reportedly said in a speech carried on Libyan television Friday. Fox News also learned that Qaddafi sent representatives to Israel earlier this week to deliver a message to opposition leader Tzipi Livni seeking ways to restore his image and gather support.

The front lines in the Libyan civil war have largely stagnated since the popular uprising seeking to oust Qaddafi broke out in February. Rebels, backed by NATO's air force bombings, control much of the country's east and pockets in the west. But Qaddafi controls the rest from his stronghold in Tripoli, the capital.

Friday's final statement by the Contact Group on Libya said the "Qaddafi regime no longer has any legitimate authority in Libya," and Qaddafi and certain members of his family must go.

The group said it would deal with Libya's main opposition group  -- as "the legitimate governing authority in Libya" until an interim authority is in place. In addition to the U.S., the 32-nation Contact Group on Libya includes members of NATO, the European Union and the Arab League.

The Contact Group representatives broke into spontaneous applause when Clinton announced that the U.S. recognizes the TNC, according to U.S. officials.

Rebel spokesman Mahmoud Shammam welcomed the recognition of the TNC, calling on other nations to deliver on a promise to release hundreds of millions of dollars in funds to the Libyan opposition. "Funds, funds, funds," Shammam said, in order to stress the opposition's demand.

He said the opposition hopes to hold elections within a year and resume oil exports very soon, saying the damage to oil facilities has been minimal and repaired. However, Shammam ruled out any new oil contracts until a new elected government is in place.

A senior U.S. official, speaking on condition of anonymity to discuss private diplomatic conversations with the TNC and the other Contact Group members, said Friday's decision by the Contact Group on Libya indicates strong support for the TNC and that Qaddafi's time is up.

The U.S. is impressed by the progress the TNC has made in laying the groundwork for a successful transition to a unified, democratic Libya which protects the rights of all of its citizens, including women and minority groups, she said.

"We think they have made great strides and are on the right path," Clinton said. "The assurances that the TNC offered today reinforced our confidence."

In response to a question why it took so long to recognize the TNC, Clinton said the U.S. administration analyzed the situation and wanted to make sure that the TNC's actions accord with its statements, aspirations as well as its values.

"We really have acted in warp time in diplomatic terms, but we took our time to make sure that we were doing so based on our best possible assessments," Clinton said.

The U.S. official said the recognition of TNC as the government of Libya would allow countries to help the opposition access additional funds. However, he stressed that more legal work needs to be done by some countries, including the U.S. and at the United Nations, to fully legalize that step.

The recognition does not mean that the U.S. diplomatic mission in the rebel-held city of Benghazi, Libya, is now an embassy. Titles of staff and names of offices will be decided in the coming days, the official said.

The Associated Press contributed to this report.