The truce, which was proposed by Russia and Turkey, was supposed to have been the first break in fighting in months, and the first brokered by international players.
Hours after both sides declared they'd observe the deal, the Tripoli-based government issued a statement that accused ex-general Khalifa Hifter's forces of violating the ceasefire in the capital just minutes after it began. The government said if it happened again they would "respond violently and harshly."
Libya is governed by dueling authorities, one based in the east and one in Tripoli in the west. Each rely on different militias for support. Both sides have different stipulations in order for the fighting to stop.
Fayez Sarraj, who is prime minister of the U.N.-supported government in Tripoli, has previously demanded that Hifter's forces retreat from the capital's outskirts and halt their offensive against it. Hifter and his allies, meanwhile, have called for the dissolution of militias fighting for Sarraj.
Brig. Gen. Khaled al-Mahjoub, who is in charge of mobilizing Hifter's forces, ruled out any retreat from areas recently captured by his troops.
"Withdrawal is not on the table," Mahjoub told The Associated Press. He said that group's fighters will remain on guard in their positions, and will meet any breach "with force."
Hifter's east-based forces, the self-styled Libyan Arab Armed Forces, launched a fresh offensive to take the capital of Tripoli in April. The fighting sparked international efforts to try to contain the crisis in the North African nation.
In recent weeks, Hifter's forces have made significant advances. Earlier this week, they captured the strategic coastal city of Sirte, the hometown of Libya's longtime dictator Moammar Gadhafi.
Earlier this week, Turkish President Recep Tayyip Erdogan and his Russian counterpart Vladimir Putin released a joint statement after a meeting in Istanbul calling for a Jan. 12 truce. They did not specify what the conditions would be.
Hifter's forces had previously held back from endorsing the truce, until the late-night announcement yesterday. Mahjoub declined to say what prompted the move.
"It is too early to reveal what agreement was reached," he said.
A U.N. peacekeeping mission welcomed the agreement. The United Nations Support Mission in Libya said in a statement that it hoped all parties would demonstrate "complete adherence" to its terms and stop the violence.
The United Nations and European powers, along with Libya's allies in the region, have been calling for a peace summit to happen in Berlin early this year that would bring together the leaders of the rival governments.
The faltering ceasefire comes as Libya is on the brink of a major escalation, with foreign backers of the rival Libyan governments stepping up their involvement in the oil-rich nation's conflict.
The east-based government, backed by Hifter's forces, is supported by the United Arab Emirates and Egypt, as well as France and Russia. The western, Tripoli-based government receives aid from Turkey, Qatar and Italy.
The fighting has threatened to plunge Libya into violent chaos rivaling the 2011 conflict that ousted and killed Gadhafi.