* Gaddafi vows not to surrender, will not step down
* Says protesters face death sentence under Libyan law
(Adds quotes, background)
TRIPOLI, Feb 22 (Reuters) - Libyan leader Muammar Gaddafi said on Tuesday he would not step down despite a nationwide revolt against his rule, vowing to die in Libya as a martyr and threatening tougher action against protesters.
Facing the greatest challenge to his 41-year rule and losing control of parts of the country, a visibly angry Gaddafi called protesters "rats and mercenaries" who wanted to turn Libya into an Islamic state.
"I am not going to leave this land. I will die here as a martyr ... I shall remain here defiant," Gaddafi said in a speech on state television.
"Muammar Gaddafi is the leader of the revolution, I am not a president to step down ... This is my country. Muammar is not a president to leave his post, Muammar is leader of the revolution until the end of time."
Gaddafi said in a rambling 75-minute address, apparently made in front of his residential compound which was bombed by U.S. warplanes in 1986, that under Libyan law the protesters deserved the death sentence. His adopted daughter died in the U.S. bombing.
He said he would call the people to "cleanse Libya house by house" unless protesters on the streets surrendered.
Pounding his fist on a podium, Gaddafi called on people to take to the streets on Wednesday in a show of support for him.
"From tomorrow, families collect your children, leave your homes, all of you who love Muammar Gaddafi, go out to the streets, secure the streets, don't be afraid of them.
"Chase (the protesters), arrest them, hand them over to the security (forces).
"They are only a few, they are terrorists. You are millions while they are only 100."
Libyan forces have cracked down on demonstrators across the country since fighting erupted in Libya's oil-producing east last week in reaction to decades of repression and after uprisings that have toppled leaders in Tunisia and Egypt.
The eastern region of Libya had broken free from Gaddafi, soldiers there said. But witnesses said tanks, warplanes and mercenaries were being used to fight the growing uprising in the capital Tripoli.
"Peaceful protests is one thing, but armed rebellion is another," said Gaddafi.
"We have not used force yet, but if we need to use force we will use it," he said.
Gaddafi said the image of his country before the rest of the world was being distorted by foreigners. (Reporting by Andrew Hammond and Dominic Evans; Writing by Reed Stevenson; Editing by Jon Hemming)