A source in the premier's office said Zeidan had been kidnapped from Tripoli's Corinthia Hotel, where he resides.
"A large number of armed men entered the place very early on Thursday.
But we did not know what was happening," a hotel employee told AFP, speaking on condition of anonymity.
A group of former rebels in Libya said Thursday it had "arrested" Prime Minister Ali Zeidan, after he was seized by gunmen from a Tripoli hotel in a dawn raid.
The Operations Cell of Revolutionaries, which in principle reports to the defence and interior ministries, said on Facebook it had seized Zeidan "on the prosecutor's orders".
The premier "was arrested under the Libyan penal code... on the instructions of the public prosecutor", the group said.
Libya's Prime Minister Ali Zeidan is in "good health and will be treated well as a Libyan citizen," and is being held at the Interior Ministry's anti-crime department, an official with the department told the state news agency.
Zeidan was seized on Saturday by former rebels who blamed him for the government's role in the US capture of a top al Qaeda suspect in the Libyan capital days earlier.
The former rebels were working for the Interior Ministry to provide security in the capital.
NATO head Anders Fogh Rasmussen called Thursday for the immediate release of Libyan Prime Minister Ali Zeidan should his abduction by gunmen in Tripoli be confirmed.
"I am watching developments very closely and with great concern," Rasmussen said at a press conference.
"If it is confirmed I call for his immediate release," he said, adding that "stability and the
rule of law are very important" in Libya as it seeks to rebuild.
Britain and France led the creation of a NATO no-fly zone in Libya in 2011 at the
beginning of a popular but chaotic uprising which ousted dictator Muammar Gaddafi.
Al Jazeera's Zeina Khodr reporting from Beirut: "The legal authorities are calling this a kidnapping but we heard the rebels say that this was an arrest."
"There is (now) controversy whether this is an arrest or a kidnapping"
"It is not clear what the Libyan government can do and if they can reign in this armed group because these rebel groups are much stronger than the army"
"They operate under the umbrella of the defense and interior ministry. but they are stronger than the state"
Breaking News: #Libya's PM Zeidan has been freed by former rebels - Reuters reports quoting Government security sources.
Former rebel gunmen freed Libya's prime minister on Thursday after holding him for several
hours in reprisal for the capture by U.S. forces at the weekend of a Libyan al Qaeda suspect in Tripoli, officials said.
A Reuters journalist at the scene said protesters had opened fire at the building where Ali Zeidan was being held to demand that the group, which is affiliated with the government, free
"The prime minister has been released," a government official said. A security source also said Zeidan was free.
Two years after a revolution ended Muammar Gaddafi's 42-year rule, Libya is in turmoil, with its vulnerable central government and nascent armed forces struggling to contain rival tribal militias and who control parts of the country.
Libyan PM Zeidan in Tweet says he is fine and that Militia captors had wanted him to resign.
(Reuters) - Please be advised that the TRIPOLI story reporting that Libyan Prime Minister Ali Zeidan had sent a Twitter message which said his captors wanted him to step down is wrong. The Twitter account was fake and was not Zeidan's.