Libyan PM Ali Zeidan has been seized by armed men in the capital, Tripoli.
Mr Zeidan was taken from his hotel before dawn "by gunmen to an unknown place for unknown reasons", said a government statement.
A former rebel group loosely allied to the government said it had arrested him following a prosecutor's warrant. The government has denied this.
The government has been under pressure after US commandos seized senior al-Qaeda suspect Anas al-Liby in Libya.
Mr Liby was snatched on Saturday in Tripoli. He is wanted in the US over the 1998 bombings of US embassies in Kenya and Tanzania.
On Monday, Libya demanded an explanation from the US ambassador over the incident.
The government is also struggling to contain rival tribal militias and Islamist militants who control parts of the country, two years after the revolt which overthrew Muammar Gaddafi.
The BBC's Rana Jawad, in Tripoli, says the details of Mr Zeidan's capture remain unclear, but that he was taken by armed men from a hotel he resides in in the early hours of the morning.
Al-Arabiya TV station broadcast images which showed Mr Zeidan looking dishevelled and being escorted by what the station said were armed men.
The government website said he had been taken "to an unknown place for unknown reasons by a group thought to be from the Tripoli Revolutionaries Control Room and the Committee for Fighting Crime".
The government statement did not name the hotel, but a woman at the Corinthia Hotel - where the prime minister lives - confirmed the incident happened there when armed men entered the building.
She said no-one had been killed.
Our correspondent says there are a number of militia groups operating in Libya which are nominally attached to government ministries but often act independently.
One of them - the Operations Cell of Revolutionaries - said it was acting on the orders of the prosecutor general in accordance with Libya's penal code.
However, state-run National Libyan TV quoted Justice Minister Salah al-Marghani as saying that the prosecutor general had issued no such order.
Libya's cabinet has been summoned for an immediate meeting under the leadership of the deputy prime minister.
UK Foreign Secretary, William Hague condemned the capture and called for Mr Zeidan's immediate release.
"It is vital that the process of political transition in Libya is maintained. The government and people of Libya have our full support at this concerning time," he said.
'Act of sabotage'
In an interview with the BBC on Monday, Mr Zeidan had said Libya was being used as a base to export weapons throughout the region, and called on the West to help stop militancy in Libya.
Last month Mr Zeidan visited the UK and appealed for British help to remove weapons from the country amid fears of increased arms smuggling to Syria.
In April he urged Libyans to back their government in the face of "people who want to destabilise the country".
He also complained at that time of other attacks and "acts of sabotage" carried out by separate groups, against the interior ministry and national TV headquarters.