The Australian relatives of Sheikh Naser Zuway, president of the Australian Union of Africa and Arab Associations, told his friend and founder of the Islamic Friendship Association of Australia Keysar Trad he had been buried in Benghazi overnight.

Sheikh Zuway entered Libya overland from Egypt in February to be with his wife and children, who were trapped in the country while on holiday. He decided to stay to support the uprising.

Mr Trad, speaking on behalf of the family, said he was told Sheikh Zuway was believed to have died during fighting in Sirte, the home town of former Libyan leader Colonel Muammar Gaddafi, yesterday.

Sheikh Zuway's family were informed his body was then sent from Sirte to an uncle's house seven hours' drive from the city.

The status of his wife and three children, who are Australian, was not yet known, he said.

"We don't have any details about how he died; all we can do is guess, I suppose, or suspect what had happened," Mr Trad said yesterday.

A Department of Foreign Affairs and Trade spokesman said this morning it was investigating reports that an Australian man had been killed in Libya. Consular officials were in contact with his family in Australia.

The National Front for the Salvation of Libya, one of Libya's leading opposition movements, tweeted this morning that Libya had "lost a jewel".

"Last night Libya lost a jewel .. Naser Attia Elzwai, one of the best human beings u will ever meet .. Martyred in Sirte! #Heroes.."

Another tweet said: "Naser left Australia to join #Feb17, led liberation of Kufra, setup stage in Benghazi c'thouse, fought in Brega, Allah Yar7amak Ya Nsura :'(."

The cleric, who was born in Libya and granted political asylum in Australia in the 1990s, had said he and his family would not return to Sydney until former Libyan leader Muammar Gaddafi was defeated.

Speaking to ABC Radio from central Benghazi in March, he said that he was willing to die in the fight for democracy.

"I'm prepared to die for the sake of freedom and justice and to see our country taking their place in the world and Gaddafi to leave Libya," he said.

"It's not better for the Libyan only. It's better for the Australian, better for the Europe, better for the entire world."

Mr Trad said he had last spoken to Sheikh Zuway three weeks ago. Supporters had earlier lost contact with him in February and then again in June.

Mr Trad said a condolence ceremony to be attended by major Muslim leaders is scheduled for tomorrow at 7pm in Lakemba.

- with Glenda Kwek