The best way to make sure that you have appropriate funds while traveling in Libya is to bring US Dollars OR Euros with you. It is very easy to exchange foreign currency at banks, hotels, or exchange bureaus.
ATM machines are becoming more available and have been more reliable over the past few years. They usually give one of the best exchange rates. Be sure you notify your bank ahead of time that you will be using your ATM card overseas to ensure that they do not put a block on your card. There may be a small fee when using your ATM card internationally.