The Prime Minister repeated his earlier call for Col Gaddafi to step down and said that all measures would be considered to increase pressure on him to go.
"We do not in any way rule out the use of military assets," Mr Cameron said.
"We must not tolerate this regime using military force against its own people. In that context I have asked the Ministry of Defence and the Chief of the Defence Staff to work with our allies on plans for a military no-fly zone."
The European Union has agreed to impose an assets freeze and travel ban on Col Gaddafi and 25 members of his family and inner circle.
Baroness Ashton, the EU’s high representative for foreign affairs, told a meeting of the UN Human Rights Council in Geneva that the union would impose further restrictions on Libya very soon, noting that violent repression in the north African country "shocks our conscience."