Leading article: Conditions for a Libyan rebel victory

The uproar over phone hacking has had one advantage for David Cameron.

It has diverted attention from a frustrating stalemate in Libya. Now, though, it risks obscuring a possible turning point in Nato's campaign to drive Colonel Muammar Gaddafi from power. Launched four months ago to prevent the Tripoli government from imposing a bloody end to the uprising in the east of the country, the air offensive has been enough to put the regime on the defensive, but insufficient to allow the disorganised and poorly armed rebel forces to secure victory.

But yesterday's meeting in Istanbul of the international Contact Group on Libya looks to have changed the equation. By recognising the National Transitional Council, the main opposition group, as Libya's government, the 30-nation group has delivered not only a massive moral boost to the TNC, but a financial one too, by placing at its disposal the overseas assets of the Gaddafi regime. These resources will allow the rebels to upgrade their fighting capacity, even as that of the regime is steadily degraded by Nato, whose forces are to be strengthened by four more RAF Tornados.

This changing military balance, combined with the new status of the rebels, creates an opening for diplomacy to secure the removal of Gaddafi and an end to an ever-growing humanitarian and refugee crisis. But a happy outcome is not guaranteed, and will require some creative concessions from the international community. For the moment, the regime vows to fight on, but there are reports that Gaddafi emissaries are putting out feelers for a deal allowing the leader to go into exile, or even – improbable though it might sound – letting him stay in Libya.

But this raises the matter of the warrants issued last month by the International Criminal Court for crimes against humanity. Gaddafi is unlikely to relinquish power voluntarily in return for a one-way ticket to The Hague. Eventual compromise here looks unavoidable.