By Robin Emmott and Francesco Guarascio
BRUSSELS (Reuters) - The European Union is considering sanctions against Libya's warring factions who fail to agree to a U.N.-sponsored peace deal after one group controlling the capital Tripoli refused to sign up this month.
The European Union says a U.N-backed deal is the only way to end the war between rival governments vying for power in the oil producer four years after the ousting of Muammar Gaddafi.
EU diplomats did not spell out which group would be targeted. But they said plans to impose asset freezes and travel bans on individuals were in advanced stages and EU foreign policy chief Federica Mogherini had raised the issue with EU foreign ministers and U.N. Special Envoy Bernardino Leon in Brussels.
"We can't just sit here while tragedies are happening. If dialogue is not bringing progress, it seems to me to be logical to impose sanctions," Spain's Foreign Minister Jose Manuel Garcia-Margallo told reporters.
The European Union is particularly keen on seeing a national unity government set up so it can seek Libya's formal approval for a naval mission to combat people-smugglers operating off the Libyan coast.
A confidential discussion paper drawn up by the EU's diplomatic service and seen by Reuters sets out a range of options for sanctions, including imposing a full oil embargo, but diplomats say the most likely option is a blacklist of individuals.
"We need to be ready to implement sanctions ... to put pressure on those who will not come to the table," Belgian Foreign Minister Didier Reynders said.
The United Nations brought factions together in the Moroccan coastal town of Skhirat to sign an initial power-sharing agreement in July after months of negotiations.
Delegates from the internationally-recognized parliament, the House of Representatives based in the east, signed the deal. But the Tripoli-based parliament, the General National Congress (GNC), refused to attend.
Under the plan, Libya will get a one-year government of national accord. A council of ministers headed by a prime minister and two deputies would have executive authority. The House of Representatives would be the legislative body, a plan meeting opposition from the GNC.
(Reporting by Robin Emmott; Editing by Andrew Heavens)