South Africa's ambassador to Libya Mohammed Dangor and International Relations and Co-operation Deputy Minister Marius Fransman were speaking at a press conference in Cape Town.
Dangor said Gaddafi was "technically correct" when he said he was not the leader of the country.
In an interview with the BBC, Gaddafi said: "If they want me to step down, what do I step down from? I'm not a monarch or a king."
In the same interview he said he was not the president and that his position was an honorary one.
Dangor said Libya was a state at war with itself.
Fransman said Gaddafi had a major influence in events in Libya, but that "legally, he is not the head of state".
Asked why South Africa had not condemned Gaddafi's call for forces loyal to him to kill any opposition, Fransman said that South Africa condemned all forms of violence including that carried out by Libyan authorities.
When asked if South Africa would consider granting exile to the Libyan leader if it brought an end to the violence in the country, Fransman said that the South African government could not deal with hypothetical questions.
He said South Africa would not take sides in the dispute.