"Libya's Government of National Unity (GNU) and other authorities are cracking down on non-governmental domestic and foreign organizations," the New York-based rights group HRW said in a statement.
The GNU, a nominally interim government based in the capital Tripoli, "should withdraw onerous registration and administration requirements and ensure that civic groups are free to operate," HRW added.
Libya, torn by conflict since a 2011 revolt that overthrew dictator Moammar Kadhafi, is divided between two rival authorities, in the western capital Tripoli and in the east, backed by military strongman Khalifa Haftar.
According to HRW, the Tripoli-based government had announced in March that "domestic and foreign non-governmental organizations could continue operating only if they 'correct their legal status' in line with a draconian" law adopted during the Kadhafi regime.
The March decision followed "months of increasing restrictions on civic group activities, including harassment and at times detention and prosecution of local staff members and obstacles for non-Libyans working in humanitarian, human rights, and other non-governmental organizations to obtain entry visas," HRW said.
The rights watchdog said authorities must take several steps to rectify the situation, including the adoption of a "civil society organization law that guarantees the right to freedom of association and expression consistent with international law and best practices."
It also called for a reform of the penal code, and "redefining criminal acts to exclude peaceful exercise of the right to express opinions, assemble and establish associations."
Libyan legislators and authorities must also "repeal the death penalty as a punishment for establishing or participating in unlawful organizations." HRW said.
"Libyan authorities are crushing civic space using the tired pretext of enforcing regulations," said HRW's Hanan Salah.
"The authorities should instead be protecting that space by upholding the right to freedom of association."
While the rights NGO speaks with pessimism, the UN's UNSMIL representative sees an upside.
"An historic opportunity is open for overcoming the decade-long crisis," Abdoulaye Bathily, head of the United Nations Support Mission in Libya (UNSMIL), told a Security Council meeting.
"There has been a new dynamic in Libya" in recent weeks, Bathily said.
"Intensive consultations have taken place amongst security actors. Institutional and political leaders have also taken action to move the political process forward."
Bathily pointed to several March and April meetings between military representatives from various regions of the country.
Representatives at the gatherings, which Bathily said represent a breakthrough, "committed to support all stages of elections, reject violence throughout Libya (and) take practical steps for the safe return of the internally displaced persons," he said.
These meetings served a substantial symbolic purpose in the effort to reconcile and unify the country, he added.
But the "new national dynamic" must be sustained and amplified, Bathily said.
"UNSMIL will intensify its facilitation and mediation," he assured, "to support the realization of all political, legal and security requirements so elections can be held this year."