Istanbul (CNN) -- Turkey's foreign minister applauded recent Libyan rebel advances against the forces of Moammar Gadhafi at an international diplomatic conference Thursday to plan for the post-Gadhafi era in Libya.
Diplomats from 29 countries gathered in Istanbul for the meeting of the Libyan Contact Group, a coalition of Arab and European governments as well as the United States and Turkey.
Representatives from NATO, the African Union, United Nations, European Union, Arab League, Gulf Cooperation Council and Libya's National Transitional Council -- the rebel Libyan government -- are also present.
"Today we are all proud and pleased with the ground-breaking developments on the ground" in Libya, said Turkish Foreign Minister Ahmet Davutoglu as he opened the meeting.
"The military victories of the National Transitional Council against the Gadhafi forces in Tripoli have brought the Libyan people closer to the noble cause that they been fighting for -- freedom, justice, dignity and democracy."
Turkey is one of the co-chairs of the Libya Contact Group.
The governments of many of the countries in attendance threw their weight behind the Libyan rebels by freezing the assets of Gadhafi's government and pledging military and financial support to the NTC, based in Benghazi.
The NTC was represented in Istanbul Thursday by its ambassador to the UAE, Arif Ali Mayed, while Washington sent Deputy Secretary of State William Burns and Jeffrey Feltman, assistant secretary of state for Near Eastern Affairs.
There was also significant Arab representation at the session, with diplomats from Bahrain, Jordan, Morocco, Lebanon, the UAE, Qatar and Kuwait. Egypt was listed as an observer.
Turkey's top diplomat announced Gadhafi had "exited the political scene," and called on the international community to recognize the NTC as the sole representative of the Libyan people.
"Its flag should be raised at the United Nations headquarters in New York, hopefully the next U.N. General Assembly," Davutoglu said, referring to the tri-color banner adopted by the Libyan opposition.
Davutoglu also said unfreezing Libyan financial assets and handing them over to the NTC was of "critical importance." He urged the U.N. Security Council to take the steps to make this transfer of funds possible.
The cash-strapped rebel leadership has already been lobbying the United Nations and several countries to release Libyan money frozen in foreign banks by the U.N. Security Council.
U.S. State Department spokeswoman Victoria Nuland said it was clear that there was "considerable work" ahead but that the mood of those present at the meeting was upbeat.
The delegates "came together to demonstrate the international community's firm commitment to supporting the Libyan people at this truly historic time," she said in a statement.
Everyone there, including the NTC, had "emphasized the need for reconciliation, respect for human rights, and justice, not retribution," she said, and given "a collective affirmation of the need for Libya's transition to be Libyan-led."
Speaking on the sidelines of the conference, Feltman told reporters the Arab League was expected to officially "seat" the Libyan National Transitional Council at the league headquarters in Cairo Saturday.
He said priorities for the Libya Contact Group were reconciliation, so that rebels would make peace with regime loyalists; adjusting the donor community to the new reality in Libya, and getting emergency funds to the NTC.
Feltman said the release of $1.5 billion in frozen assets would help pay outstanding oil bills and keep the electricity on in Libya.
A U.S. proposal for the U.N. Security Council to hand frozen Libyan government assets to the NTC is opposed by South Africa, which is not a member of the Libyan Contact Group. The Security Council met on the matter Wednesday.
Speaking in Rome Thursday after a meeting with senior NTC member Mahmoud Jibril, Italy's Prime Minister Silvio Berlusconi pledged to help the NTC.
Italy will unfreeze about $505 million (350 million euros) in Libyan assets that have been held in Italian banks, Berlusconi said.
He also promised money to support Libya's health and education infrastructure and for military training.
Jibril said that the battle for Tripoli was still going on, but that Libya must think of its future.
He said urgent aid was needed to deal with the situation, adding that some people had not received a paycheck for months.
If the NTC was not able to provide basic services and pay salaries, there was a risk that it would fail and the country would be destabilized, he warned.
CNN's Hada Messia and Jill Dougherty contributed to this report.