"A diplomatic delegation left Bern for Tripoli on Wednesday to give explanations to the Libyan authorities" on the arrest of Kadhafi's son, added the Swiss foreign ministry in a statement.
Hannibal Kadhafi, 32, was released on bail by Swiss police last week after being accused of assaulting staff at a Geneva hotel on July 15.
Swiss Foreign Minister Micheline Calmy-Rey spoke to her Libyan counterpart Abderrahman Shalgan by telephone on Tuesday and made a "firm protest," whilestressing that she wished to avoid the issue from escalating, the ministry said.
According to the ministry, the Libyan authorities on July 17 put "retaliatory measures" in place against Switzerland.
Libya's envoy in Switzerland was recalled and the Libyan authorities suspended the issuing of visas to Swiss citizens, said the ministry.
Air links between Switzerland and Libya have been reduced, two Swiss nationals are in police custody since Saturday and Swiss businesses in Libya have received closure orders, according to the ministry. Bern, meanwhile, has advised Swiss citizens not to travel to Libya.
In Tripoli dozens of Libyans on Wednesday staged a protest outside the Swiss embassy over the alleged "mistreatment" of Kadhafi's son.
The demonstrators, mainly members of Kadhafi's revolutionary committees, also handed a statement to Swiss ambassador Daniel Von Muralt, warning of reprisals unless Switzerland officially apologises for the arrest.
The statement, a copy of which was obtained by AFP, did not specify the nature of the reprisals but mentioned "serious measures against Switzerland and its relations with Libya."
An official of the revolutionary committees told AFP however that Libya could cut oil supplies to Switzerland, which depends on the North African nation for most of its oil needs.
A break in diplomatic ties and the expulsion of Swiss companies working in Libya are among the measures being considered by Libya, said the official on condition of anonymity.
The statement described Hannibal's arrest as "an odious crime" against the honour of the Libyan people and a "dangerous precedent."
Von Muralt told protesters that the arrest was not aimed at "harming the feelings of the Libyan people."
Le Temps newspaper said last week that the Swiss government was trying to prevent the arrest from becoming a diplomatic incident, not least because Libya is the largest provider of oil to Switzerland.
Kadhafi's wife was also involved in the alleged incident in Geneva. She too was released on bail.
Hannibal Kadhafi was investigated in Paris in 2005 for alleged violence against his companion after incidents in two hotels in the city.
He also gained notoriety for driving down the Champs Elysees at 140 kilometres per hour (87 mph) before being stopped by police.
See also: Gaddafi's son, Hannibal, charged with violence in Geneva...
And this: Hannibal Gaddafi leaves Geneva...
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