Libya's two rival factions signed a “permanent” ceasefire agreement after five days of talks at the United Nations. AFP

Libyans have reacted with a mix of hope and scepticism after the signing of a nationwide ceasefire deal intended to pave the way towards a political solution to the country's grinding conflict.

While observers have welcomed the UN-backed deal, few are under any illusions about the difficulties of turning it into lasting peace on the ground.

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"We've seen a lot of deals in the past," said Hassan Mahmud al-Obeydi, a 40-year-old secondary school teacher from the eastern city of Benghazi.

"What's important is the implementation."

Youths gather at a sidewalk cafe in Libya's eastern coastal city of Benghazi on Friday. AFP

Friday's deal was signed in Geneva by military delegates from the two main warring parties in the North African country, which plunged into violence in 2011 with the NATO-backed revolt that toppled veteran dictator Moamer Qadhafi.

The Tripoli-based unity government and rival forces led by eastern military commander Khalifa Haftar agreed to withdraw from front lines, start demobilising armed groups and set about integrating them into the state.

Crucially, the deal also calls for the departure of all foreign forces from Libyan soil within three months.

Military commander Khalifa Haftar. File photo

"It's good that the two sides have been prepared to compromise, but the devil is in the detail," said Peter Millett, a former British ambassador to Libya.

"There are an awful lot of questions. A key one is: will countries that have been sponsors of military forces in Libya support this compromise?"

Both major camps in Libya's complex war have received extensive backing from foreign powers.

Friday's deal comes four months after Haftar's Russian- and Emirati-backed forces gave up their year-long attempt to seize the capital Tripoli, a battle that killed hundreds of people and displaced tens of thousands.

Troops loyal to Libya's government prepare themselves before heading to Sirte, in Tripoli, Libya. File/Reuters

In June, Haftar withdrew from western Libya in the face of a blistering counterattack by forces supporting the Government of National Accord -- backed by Turkey.

The battle had further deepened the bitter mistrust between the rival political camps and their military allies, as well as ordinary Libyans.

"The war caused terrible social divisions," said Obeydi. "Work is needed immediately, right now, to rebuild and to heal the deep wounds in Libyan society."